CHICAGO – Apex Investment Partners in mid-June was halfway to its $100 million target for Apex Investment Fund IV, and sources at the firm hinted the vehicle’s final tally could be much higher than originally expected.
The fund, launched in September 1998 (VCJ, October 1998, page 17), will focus on early-stage telecommunications, information technology, software and consumer deals. The $50 million June close included commitments from Nationwide Life Insurance Co., the New Mexico State Investment Council, Sovereign Financial Services’ fund-of-funds, the pension of a major telecommunications company and a client of Cambridge Associates.
Apex expected a close on an additional $35 million in mid-July, including a $25 million commitment from the Pennsylvania State Employes’ Retirement System (SERS), said George Middlemas, Apex’s managing general partner.
“I think this fund will be well over [$100 million],” he added. The vehicle has a cap of $160 million and features standard terms, including an 80%/20% carried interest split and an average 2% management fee over the life of the fund.
Apex IV will invest an average of $5 million per portfolio company, ranging from very small seed deals to $7 million roll-ups, and the fund’s typical first round deal will average about $2.5 million to $3 million, Mr. Middlemas said. The firm at press time had three deals “in the hopper,” one of which was expected to close by the end of July, he added.
The $58.8 million Apex III closed in fall 1997. The fund invested in 23 companies and netted a more than 65% net-to-limited internal rate of return, Mr. Middlemas said. Fund II earned more than 39% net-to-limited.
Mr. Middlemas, Managing General Partner James Johnson, and General Partners Lon Chow and Babu Ranganathan comprise Apex’s Investment team. The firm is seeking one or two associates.