Diversis Closes New Fund, Stays Active

Diversis Closes New Fund, Stays Active

Over the past 14 months, Diversis has added 4 new portfolio companies

Diversis Capital Management has held an oversubscribed and above target final close of Diversis Capital Partners II LP with $675 million of capital commitments. The new fund was raised in just three months and exceeds the firm’s first fund which closed in 2019 with $255 million of capital.

Investors in Fund II include endowments and foundations, investment advisers and fund-of-funds, public and private pension plans, family offices, and financial institutions.

Diversis makes control investments of $10 million to $100 million in software and tech-enabled companies that have revenues from $10 million to $50 million and up to $10 million of EBITDA. Geographically, Diversis invests in businesses primarily based in North America, and selectively in Europe and Australia. Los Angeles-based Diversis was founded in 2013 by managing partners Ron Nayot and Kevin Ma.

“As we have built Diversis over the past eight years, we have focused predominantly on investing in software and technology-enabled services companies to drive innovation and growth. We partner with management teams to build scale and extend market leadership, which has, in some cases, led to the doubling or tripling of revenues at our portfolio companies organically. We are excited to continue to execute on our strategy with this latest fund,” said Mr. Ma.

A recent transaction closed by Diversis is the July 2021 buy of Adlib Software, a Canada-based provider of software used by companies to standardize, extract, and leverage structured data from large unstructured contract datasets from multiple sources and file formats. Adlib’s customers are generally active in the financial services, insurance, life sciences, pharmaceutical, and oil and gas sectors.

In addition to the buy of Adlib, over the past 14 months, Diversis has also invested in RFi Group, an Australia-based provider of data gathering, analysis and decision support services to the financial services industry (November 2020); Black Box Intelligence (formerly TDn2K), a Texas-based provider of workforce, guest, consumer and financial performance benchmarks to the restaurant industry (January 2021); and Performance Designed Products, a California-based developer of aftermarket videogame accessories including headsets, controllers, power cables, and cases (April 2021). A recent exit closed by Diversis is the sale of ArrowStream, a provider of supply chain management software to the foodservice industry (December 2020).

“We have remained extremely active during the pandemic by adding four new platform investments in addition to several highly strategic add-on acquisitions. We have also successfully sold one of our portfolio companies. This shows our ability to adapt to various economic climates and find success for our limited partners and portfolio companies despite a turbulent backdrop,” said Mr. Nayot. “Fund II will continue to build upon our team’s proven track record utilizing partnerships and collaboration with the existing management teams to build successful technology companies.”

“We are fortunate to have a strong, dynamic and growing team of investment professionals, operating advisors, and portfolio company management teams who are integral to our success,” concluded Mr. Ma.” Our entire team is grateful and proud that we were able to exceed our target and complete our fund-raise in a relatively short period of time and we want to thank our new and existing limited partners for their support and vote of confidence.”

Diversis used Evercore as its placement agent on this fundraise and Kirkland & Ellis provided legal services.

© 2021 Private Equity Professional | September 14, 2021

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