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DURHAM … Parish Capital Advisors is raising an unusual “fund of funds” that will solicit money from large state and institutional investors and reinvest it in other venture funds.
Three well-known investment managers with considerable institutional investing savvy and experience handling very large funds founded the Durham-based group last year.
Charles Merritt, formerly director of private investments for The Duke Endowment, managed $750 million in private equity commitments, which included 90 investments in more than 35 firms.
Previously, as director of private investments for the University of North Carolina at Chapel Hill, Merritt built the university’s private equity portfolio to approximately $350 million. He acquired his direct investment experience at Bank of America’s private equity group, where he structured $10 to $40 million private equity investments in middle market buyouts and equity transactions.
James Mason directed private investments for Duke University Management Co., (DUMAC) managing $2 billion in private equity. His portfolio represented more than 200 investments in over 70 firms. He served on 16 private equity boards, including one fund-of-funds advisory board. Previously, he worked with First Chicago’s private equity group, putting together $5 to $15 million private equity deals.
Wendell McCain, was a BancBoston Ventures vice president who led a group managing $600 million in private equity and assisted the BancBoston fund of funds group.
Gabriele Bowers, recently program coordinator at DUMAC, handles day-to-day management duties for Parish.
Merritt declined Local Tech Wire’s request for an interview, writing in an email: “We are in the middle of our private offering and the SEC is not fond of folks in that process speaking to reporters.”
Strong track record
Several local venture capitalists are familiar with what Parish wants to do. Steve Nelson, who heads the Research Triangle office of The Wakefield Group, a Charlotte-based venture firm, tells LTW, “Merritt, McCain and Mason have a stellar track record. I’d love to be an investor in this fund myself. Their fund of funds strategy is spot on.”
Nelson says he knows them well. “They’re all Morehead Scholars who went to school together at the University of North Carolina at Chapel Hill. They’re fun to be around but a tough crew. Their track record is phenomenal. I’m convinced they’re going to do well.”
Parish registered its first fund in March and hopes to raise several hundred million by fall. DUMAC extended Parish a loan and line of credit in undisclosed amounts.
Nelson says the idea of a fund of funds makes sense for “the big guys, state pension plans and endowments. They might have from $20 to $60 billion in assets and like to make investments of $30 million or more, but most investors do not want to be more than 10 or 20 percent of a given fund.”
Nelson compares it to mid-sized venture funds of $100 million or more. “They can’t invest $100,000.” The same thing is true of those large pension funds and endowments, he says. “The big guys would like to play, but they don’t have time or expertise to manage those $30 million investments.”
Nelson says Parish plans to identify “The next great set of managers and investors and help folks raise a great new fund the way our job is to raise a great new company.”
Although the Parish fund of funds will invest nationally, its location here will help the Triangle, Nelson says. “I’m glad they didn’t think they had to go to Silicon Valley to do it. They think the RTP is mature enough that they can operate with a national perspective from here.”
What it means to this region, Nelson says, is that when Parish brings fund managers to the Triangle, Parish may say, ‘Have you been to the Council for Entrepreneurial Development? Have you talked with Venture South or the Wakefield Group? A natural synergy could come out of this and it could attract more venture capital to our area.”
Parish Capital Advisors: www.parishcapital.com