ROCHESTER
DeltaPoint Capital Management, LLC, the brains behind the Alliance Bank merger, is looking for Central New York companies in which to invest. It set up a $50-million fund, which its managers hope will spawn about 15 new deals.
It’s the third such fund created by the management group, which is looking for companies that have annual revenues of $10 million or more, says David H. Waterman, DeltaPoint’s managing director.
The fund’s money is available to companies throughout upstate New York, Waterman adds. He says he’d like to see about five of the 15 new deals completed in Central New York.
“If you look at it, Central New York is populated with a million and a half people
or so,” Waterman says. Of the 8,000 companies we target for possible investment, maybe 1,500 of those are in Central New York. And obviously Central New York is culturally aligned with how we approach our business.
“A number of private companies, a number of
people, would prefer to deal with people from upstate New York than downstate New Yorkers or people outside the area,” he continues. “For that reason, we get a lot of opportunities we look at.”
The fund, DeltaPoint Capital III, L.P., is the third pool of capital managed by DeltaPoint and targeted for investment in established, profitable, well-managed, privately owned companies located in upstate New York.
DeltaPoint Capital III’s limited partners include the New York State Common Retirement Fund, which has committed the first $25 million to DeltaPoint Capital III. The $105 billion fund is the nation’s second-largest, public-pension fund. The balance of committed capital has been raised among a number of individual investors and institutions from Upstate.
“Investing in New York-based businesses is one of the best ways to boost the state’s economic strength,” says Alan G. Hevesi, New York state comptroller, the sole trustee of the Common Retirement Fund. “The partnership with DeltaPoint is a significant piece of our overall strategy to invest up to $250 million in New York-based firms.”
DeltaPoint makes its money through its management fees. It also expects to share in the capital gains of the companies in which it invests. Sometimes, it funds loans, but usually it looks for equity in the business – common stock, preferred
stock, or membership interest.
Companies that are going through growth and change tend to be the companies that DeltaPoint seeks, Waterman says.
“We’re looking for companies that are at a point of change and define those points of change to be a division of a company being acquired by its management… or a family-owned business that needs to be recapitalized so a family can resell it,” he says. “Another example would be a smaller company that needs refinancing companies going through some point of a change… either within their own structure or acquiring other businesses.”
DeltaPoint makes sure management is tightly woven into the investment strategy.
“We get management to put their own money into the deal with us,” Waterman explains. “They really become our partner. We help them to come up with that money in some cases, but we’re always looking for management to be vested. We also look for management that has a proven record of moving with the business. We’re not trying to back a management team that wants to take over a company from the outside.”
DeltaPoint Capital III has applied for a license to operate as a Small Business Investment Company for the U.S. Small Business Administration, It expects to re
ceive the license, later this year.
Copyright Central New York Business Journal Jul 04, 2003
