GRAND RAPIDS — A new office in suburban Detroit gives Blackford Capital a market presence to scout for deals in the heart of the auto industry and center for American manufacturing.
The Royal Oak office, which will provide the private equity firm with greater ability to recruit talent as it grows, was “the right next step” for the Grand Rapids-based Blackford Capital, according to founder and Managing Director Martin Stein.
Having a physical presence in the market can aid in sourcing deals, Stein said. Blackford’s Michigan Prosperity Fund, which invests in mature manufacturing companies in the state, includes three portfolio companies based in Southeast Michigan and there are “a number of other ones that we’re looking at,” he said.
“We thought it made a lot of sense to have a meaningful presence over there,” Stein told MiBiz. “It’s a big step for us as we continue to invest back into the state of Michigan.”
The Royal Oak location is Blackford Capital’s third, in addition to the Grand Rapids headquarters and a satellite office in La Jolla, Calif. that’s part of the firm’s National Growth Practice private equity fund.
The move for Blackford Capital comes as Detroit has experienced an economic resurgence in recent years.
“We think it is a great place to attract talent, a great place for investment opportunities, and represents a lot of what we like about Michigan,” Stein said. “Investing is a local and a relational activity. Detroit represents a big part of the market, so in having the Michigan Prosperity Fund, we think we were missing a lot by not having had something in Detroit. Now we’ll be gaining a lot.”
Leading the new office as managing director is Carmen Evola, who’s also fund manager for the Michigan Prosperity Fund. With 23 years of experience in the manufacturing sector, Evola most recently served as president and CEO of Cleveland-based Vari-Form Group LLC, formerly Crowne Group LLC, which consists of a $900 million portfolio of nine companies with about 5,000 employees and 27 manufacturing and distribution facilities globally.
Vari-Form Group nearly doubled in size in the four years during Evola’s tenure.
In the Detroit area, Evola sees a market that has a much larger talent pool to draw from and is filled with potential acquisition targets.
“As we continue to find potential new investments into the Michigan Prosperity Fund, the direct access to owners that would consider partnering with us (and) having a presence on this side of the state with the amount of manufacturing that takes place, is exciting,” Evola said.
Accessing a larger talent pool is important for Blackford Capital’s growth, Stein said. A position in a major metropolitan area the size of Detroit can lead to more applicants when the firm adds positions, whether for managing directors and vice presidents or analysts and associates.
“That’s important to us to continue doing a great job growing our companies. Supporting them, we need to have the best talent possible, and I think Detroit helps with that,” he said. “We will be investing a lot and adding a lot of people there.”
Having an office in Southeast Michigan also expands Blackford Capital’s potential pool of investors.
The firm had always maintained a statewide investor base, Stein said. The performance of portfolio companies and the results of the Michigan Prosperity Fund are “what is going to be most compelling (to investors) regardless of where it is that we are, but certainly having a larger commitment to Michigan can be compelling for some people,” he said.
Stein founded Blackford Capital in 2000. He relocated the firm from the Los Angeles area to his hometown eight years ago and in 2012 launched the Michigan Prosperity Fund, which owns eight portfolio companies in Michigan. The fund has deployed roughly $50 million in capital, plus another $20 million through co-investments from partnering investors, and has nearly reached its maximum capital deployment.
Blackford Capital most recently exited Grand Rapids-based printer Dickinson Press LLC in a sale to Brainerd, Minn.-based CJK Group Inc.
The firm has about $215 million in assets under management. The National Growth Practice also owns four portfolio companies.