CPS Capital has held a final and above target closing of CPS Partners Fund LP (Fund I) with total commitments of C$100 million.
Toronto-headquartered CPS began raising its new fund in 2020 with an original target of C$75 million. The firm was founded in 2013 by Jeff Tung and Michael Arblaster, and Fund I follows three single-asset investment funds previously raised by CPS.
CPS makes majority investments in small to medium-sized businesses (SMBs) that have enterprise values from C$5 million to C$50 million, EBITDA of C$1 million to C$8 million, and EBITDA margins above 15%.
“Ever since we began investing in 2013, we immediately saw the benefits and value available in the SMB space,” said Mr. Tung. “Even as most other asset classes have seen significant price inflation in the last few years, the microcap space continues to be a buyer’s market. Our team’s strong focus on developing deeper relationships with founders and contributing operational excellence will allow us to continue to capitalize on these opportunities.”
“From the outset, Mike, Jeff and I were confident that investors would see the same opportunities that we see in the microcap space, but we are truly humbled by the overwhelming support and demand throughout the process,” said Jason Fenn, a partner at CPS. “We have been tremendously fortunate to attract very sophisticated and top tier limited partners who have diverse backgrounds and experiences.”
CPS plans to invest in five to seven platform assets over the life of its new fund and has already closed on investments in Cloudli, PharmaSmart, and HiQo.
Cloudli is a Montreal-based provider of VoIP communication services including voice, data and messaging to North American-headquartered SMBs. CPS acquired babyTel in November 2020 and rebranded the company as Cloudli in January 2021.
PharmaSmart is a Rochester, New York-based provider of blood pressure kiosks that are used in more than 7,000 retail locations in United States and Canada, including chain drug, supermarket and discount stores. The company’s kiosks take more than 65 million blood pressure measurements annually. CPS invested in PharmaSmart in July 2021.
HiQo Solutions is a Richmond Hill, Georgia-headquartered provider of technology development services with a focus on software, the Internet of things, and mathematical data processing. CPS invested in HiQo earlier this month.
Investors in Fund I include long-time limited partners from earlier CPS funds including strategic anchor investors, family offices, and high net worth individuals.
“Our investors are a dynamic and engaged group that bring a wealth of experience across many industries,” concluded Mr. Fenn. “The strength of our investors has added an additional strategic advantage when analyzing potential acquisition opportunities and working with management teams to build and transform our portfolio companies to incorporate best and industry-leading practices.”
© 2021 Private Equity Professional | August 20, 2021