RALEIGH — Investment company Plexus Capital has raised $150 million for its third fund – two-and-a-half times the size of its last fund.
The privately held company, which operates out of offices in Raleigh and Charlotte, had targeted raising up to $100 million but blew past that goal.
“We just happened to really get the wind in our sails,” said Bob Anders, co-founder and managing partner.
Existing investors that plowed $58 million into the last fund upped the ante this time around and invested $90 million, said co-founder and partner Michael Painter. New investors provided the rest.
The fund’s investors include 37 banks – the majority of which are in North Carolina and Virginia – as well as institutional investors such as pension funds and wealthy individuals.
Plexus intends to use the money to invest between $2 million and $10 million or so in companies with annual revenue in excess of $10 million. Its investments typically are in the form of loans plus warrants for a small equity stake in the business.
In the past, said Painter, Plexus has invested one out of every five dollars in businesses that are based in North Carolina.
“If we had our wishes, 100 percent would be right here within driving distance,” Anders said. “We go where the deals are.”
As a licensed Small Business Investment Company, Plexus also can borrow additional funds at attractive rates through the federal Small Business Administration. Its latest fund-raising entitles it to borrow an additional $150 million – the maximum SBICs can borrow – giving it a total of $300 million available to invest.
That assumes that Plexus’ application for a third SBIC license is approved, but that would appear to be a slam-dunk given that last month the SBA named Plexus the Small Business Investment Company of the Year.
SBA Administrator Karen Mills cited the company’s “hard work, innovative ideas and dedication to your community” in a letter notifying the firm of the award.
“Here’s a local provider of capital to small businesses that historically has been a little bit under the radar screen,” Anders said. “I think the national award we have won really speaks to our success.”
To date Plexus has invested $256.5 million in more than 50 companies. Plexus doesn’t specify the returns reaped by its investors, but says its target is to generate annual returns of 12 percent to 18 percent after fees and expenses.
“We have consistently made returns in those parameters for our investors,” Anders said.
Plexus made its first investment in 2005 but its five co-founders previously worked together at RBC Centura Bank. They include Kel Landis, a former CEO of RBC Centura.
The company’s staff of investment professionals has doubled in size, from 7 to 14, since the end of 2009. The staff is evenly split between Raleigh and Charlotte.
About 90 percent of the company’s investments, Painter estimated, revolve around a change of ownership of some type, such as when an entrepreneur wants to sell their business and the acquirer needs financing.
“We’ve seen more (potential) deals in the last nine months than we’ve ever seen,” Painter said. “A lot of it is hustle. We’re salesmen just like everybody else out there.”
But Plexus won’t have to hustle to raise more money from investors for a little while.
“Our model is to look to close somewhere (around) 10 to 12 transactions a year,” Anders said. “We will look forward to investing this money over the next ... four to five years.”