Aphias Capital raised just over $1.05 billion against a $900 million goal, Sheridan Capital Partners nearly doubled its last fund to $1.1 billion, and Taurus Private Markets beat its target by a third.
For all the attention on stalled mega-deals and gated credit funds, three managers at the smaller end of private equity finished raising money ahead of plan this week.
Aphias Capital, a San Francisco firm that invests in lower-middle-market health-care services and essential-services companies, held a final close on Thursday for its first fund at just over $1.05 billion. Its target was $900 million, and the firm said demand exceeded its hard cap. Investors included public pension plans, health systems, insurers, endowments, family offices and funds of funds.
Sheridan Capital Partners, a Chicago firm that invests only in health care, closed its fourth flagship fund on Wednesday at its $1.1 billion hard cap. Its previous fund raised $575 million. Demand outran the cap, and Sheridan said it finished allocating commitments less than two months after it started marketing the fund. It also closed a separate $245 million fund for health-care information technology.
Taurus Private Markets, a Pennsylvania firm, closed its third fund at $301 million on Thursday, against an initial target of $225 million. Taurus is a fund of funds: it commits to smaller buyout, credit and venture managers and also does co-investments and secondary deals.
The numbers
Aphias finished about 17% above its target. Taurus finished about 34% above. Sheridan's fund is about 91% larger than its predecessor. Including Sheridan's technology fund, the four vehicles total about $2.7 billion.
The firms' focus
The three firms share a focus on smaller companies. Aphias and Sheridan target health-care services and related businesses; Aphias describes its targets as companies with recurring demand. Taurus limits its buyout and credit commitments to funds with target sizes below $1.25 billion.
Rob Wolfson, Aphias' founder, described the firm as "a start-up 20 years in the making," built by a team that had worked together for years.
Their own description of the market
None of the three described fundraising as easy. Sheridan said it closed "despite market challenges." Kevin Campbell, Taurus' co-founder, called it "a formidable fundraising environment."
The closes come during a week in which the planned listing of Firmus Grid, an Australian AI data-center company, struggled to find buyers at its marketed price, and in which managers of private credit funds sold to individual investors have kept capping how much money can be pulled out.
Competing views
One reading is that institutional investors are rewarding specialist managers and smaller funds, where entry prices may be lower and exits do not depend on a strong IPO market, and that the demand is real enough to push funds past their targets.
Another reading is that three closes say little about the industry as a whole. These are self-reported figures from firms announcing their own successes, the amounts are small relative to the overall fundraising market, and the managers themselves describe conditions as difficult.
Deployment
How quickly the funds put capital to work, and at what prices, will show whether the lower middle market offers better entry points. Fourth-quarter fundraising totals across the industry will show whether these closes are part of a broader shift.