Arctos to Experiment with a Sports Investment Strategy in Private Capital Markets
Arctos Partners, a leading investment firm, has announced the launch of a new venture, the Arctos Keystone fund. This strategic investment strategy aims to provide growth capital and liquidity solutions to owners of premier private equity platforms.
The Arctos Keystone Partners Fund, as it is officially named, was filed with the Securities & Exchange Commission on June 22. According to Arctos co-founder Ian Charles, the Keystone fund operates as "private equity for private equity firms."
The Keystone fund's primary objective is to offer bespoke growth capital and liquidity solutions to private equity-backed firms. This includes facilitating management buyouts, enabling firms to achieve greater team ownership and alignment with long-term growth objectives.
The fund also aims to facilitate liquidity events, allowing existing owners to monetize part of their equity stakes without altering the firm's core strategy or leadership. Additionally, it seeks to create strategic partnerships with minority investors to enhance capital structure and support long-term objectives.
Arctos plans to target the world's 200 largest private equity firms as potential investments. The strategy is similar to Arctos' successful sports fund, which has invested in minority equity in pro sports franchises across various leagues, including the NBA, NHL, MLB, and European soccer.
Interestingly, before the emergence of private equity investors like Arctos in 2019, limited partner equity of sports teams was somewhat illiquid. The presence of institutional investing in sports ownership helps the market for rising team values and provides more buyers for teams' minority shareholders.
Arctos has extended an investment opportunity in the new fund to sports ownership groups and player association pension fund clients, offering them the opportunity to invest at a "material" discount to the fees charged by the private equity firm. The fund is not limited to sports ownership groups and player association pension funds; it is open to investment from a broader range of clients.
Arctos maintains a strong commitment to and conviction in the sports ecosystem, and this new fund is a testament to that commitment. In a letter addressed to "our friends in the sports and live entertainment industry," Arctos extends an invitation to be part of this exciting new venture.
The Arctos Keystone fund could provide liquidity, more capital for growth, acquisition opportunities, or capital to change the direction of a fund that's already in operation. With its strategic approach and commitment to sustainable growth and operational continuity, the Arctos Keystone fund is poised to make a significant impact in the private equity landscape.
The Arctos Keystone fund, designed as private equity for private equity firms, aims to offer customized growth capital and liquidity solutions for private equity-backed businesses, including management buyouts, facilitating greater team ownership, and long-term growth alignment. Additionally, the fund seeks to create strategic partnerships with minority investors, enhance capital structure, and support long-term objectives.
