RESTON, Va. – Founded by eight former employees of PricewaterhouseCoopers Securities, Mercator Management is aiming for a mid-fall final close on its first fund, the $200 million-targeted Mercator Broadband Partners, said Lior Samuelson, managing partner. The fund was launched in May and held a first close shortly thereafter, Samuelson said, although he declined to disclose the size of the initial close.
The fund will back early-stage companies that develop enabling technologies which improve the speed of data transmission, Samuelson said. This includes infrastructure plays, software platform developers, optical systems companies and wireless systems companies, among others, he added. “We want to back the companies that supply the picks and shovels for the current broadband revolution,” he noted.
“We were seeing some extraordinary opportunities in this field and the natural thing to do, given our relationships with entrepreneurs and money sources, was to found Mercator,” he said. Samuelson is the former president and chief executive officer of PricewaterhouseCoopers Securities. His partners in Mercator include John Baring and Rhodric Hackman, the former co-heads of PricewaterhouseCoopers Securities’ communications and media investment banking group. Prior to that, the two had co-founded Hackman, Baring & Co., a boutique communications investment bank.
Mercator’s new vehicle will back as many as 25 companies, with investments ranging from $3 million to $20 million. Samuelson said he expects deals to average about $10 million in size. The fund does not have a particular geographic focus, although Samuelson expects to see a number of deals from the metropolitan Washington, D.C. area, which is close to Mercator’s offices in Reston, Va. The fund will also scout for promising deals in Israel, where it will look for Israeli companies that want to operate in the U.S., he added. “We are focusing on a particular industry space and looking for winners in that space. We are not worried about where the winners come from,” he said.
Samuelson said fund raising had been going very well for a first-time vehicle, although he declined to say how much capital the firm had raised to date, describing it simply as “a substantial amount.” He said the firm had been targeting investors that are knowledgeable about broadband and active in the sector as potential limited partners. He declined to identify any of the firms LPs, beyond describing them as corporations, high-net-worth individuals and large institutional investors. “It should be a nice broad mix of LPs,” he added.
Samuelson also declined to reveal the fund’s management fee or carried interest structure. To date, the vehicle has made one investment for $5 million in eGrail Inc., an Internet software and services company.