Sweetwater’s Secondaries Fund Hits Hard Cap

Sweetwater Investment Management has held a hard cap, oversubscribed, and final close of its debut multi-client fund, Sweetwater Secondaries Fund II LP, with $350 million of capital.

Sweetwater’s new fund invests in buyer-led secondary opportunities. Buyer-led secondaries are a type of secondary transaction where the buyer selects fund assets for purchase and assumes the role of general partner in ongoing asset management activities.

“Our buyer-led secondaries approach allows us to proactively build meaningful positions in targeted companies while driving below-market pricing and eliminating costs from the system,” said James Gamett, the founder and a managing partner of Sweetwater. “Our limited partners view buyer-led secondaries as an attractive way to access high performing private companies at steep discounts to current market values.”

Sweetwater closed on its new fund despite being partially raised when the US economy was shut down due to the COVID-19 pandemic. As a result of the ongoing pandemic, many limited partners in the new fund conducted their due diligence virtually with final capital interests – most were committed to after the economic shutdown – totaling more than the hard cap.

“The buyer-led secondary market supply has increased dramatically, and few secondary buyers are equipped to access and underwrite these types of opportunities,” said Gregg Parise, a managing partner at Sweetwater. “Therefore, the fund is benefiting from a market that currently allows us to be extremely targeted and selective in building the optimal portfolio.”

In addition to Mr. Gamett and Mr. Parise, Sweetwater’s professional staff includes Managing Partner Brent Granado; CFO and COO Travis Greenwood; Vice Presidents Matt Kelsay and Hahn Lin; and Investor Relations Manager Aura Caruthers. The new fund’s general partner and its affiliates have committed $20 million of the $350 million in capital.

Sweetwater focuses on venture capital, growth equity and small buyout opportunities with an emphasis in the healthcare, technology, and consumer sectors. The firm was founded in 2016 and is headquartered 25 miles north of San Diego in Encinitas, California.

Harken Capital Securities was the placement agent for the new fund and Cooley provided legal services.

Private Equity Professional | October 7, 2020

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