Diversis Closes First Fund

Diversis Capital Management has held a final closing of its inaugural fund, Diversis Capital Partners I LP, at its hard cap of $255 million. The new fund had an original target of $200 million and was raised in just six months.

Investors in Fund I include endowments and foundations, investment advisers and fund-of-funds, public and private pension plans, family offices, and financial institutions. Diversis was founded in 2013 by managing directors Ron Nayot and Kevin Ma and is based in Los Angeles (www.diversiscapital.com).

“We are truly humbled and grateful for the support of our investors and we look forward to partnering with them for many years to come,” said Mr. Ma. “This will be an exciting new chapter for us, and we spent a long time preparing ourselves to meet this head on.  We’ve built Diversis carefully over the last six years brick by brick and have assembled an extremely specialized, tight-knit team that is well-positioned to take advantage of the software and technology opportunity set in the lower middle market.”

The new fund will invest primarily in businesses based in North America, and selectively in Europe, and intends to make investments across multiple sectors, but will focus primarily on opportunities in the technology sector with a specific interest in software. Typical targets will have at least $10 million of revenue and up to $25 million of EBITDA.  Other areas of interest within technology include hardware, IT services, and telecom; and further sectors of interest include industrials, services, consumer and healthcare.

The raising of Fund I follows several new investments and one realization. Current Fund I investments include PureCars Technologies, an Atlanta-based provider of data and marketing automation technology to auto dealers (April 2019); and Tempo, a Reykjavik, Iceland-based provider of time management and utilization software (November 2018).

In July 2018, Diversis sold BLUE Software, a Chicago-based label and artwork management software company, to Esko, a subsidiary of publicly traded Danaher Company (NYSE: DHR). Diversis acquired BLUE in December 2014 from Chicago-based SGK, a subsidiary of publicly traded Matthews International (NASDAQ: MATW).

During its ownership term, Diversis invested in BLUE’s sales function and research and development capabilities, and completed the add-on acquisitions of Design2Launch from Kodak in May 2016; and Viki Solutions in January 2016. “We worked in close partnership with BLUE’s management team,” said Mr. Nayot. “This collaboration illustrates the hands-on, operational expertise we bring to our portfolio companies.”

“We want to thank our investors for their support and confidence in our team and strategy as we continue the evolution of our firm,” added Mr. Nayot. “Just as important as being uniquely focused on the combination of growing and optimizing companies, we have fostered collaboration and partnership that has also extended beyond our internal teams to our portfolio companies, investors and even counterparties.  We are excited about the changes this fundraise brings to our organization and as always will continue to push forward using technology to create competitive advantages within our investments.”

Evercore Private Funds Group was the placement agent for this fundraise and Latham & Watkins provided legal services.

© 2019 Private Equity Professional | June 5, 2019

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