GRAND RAPIDS — The $100 million private equity fund created to invest in Michigan-based companies has completed its fundraising and now turns its attention to deploying the capital over the next few years.
The Grand Rapids-based Auxo Michigan Opportunity Fund I LLC, launched in February 2021 with the backing of Doug and Maria DeVos’ family office, netted the $100 million from 76 investors, according to a federal regulatory filing.
“The Michigan Opportunity Fund is all about helping Michigan-based businesses thrive and grow,” Doug DeVos, co-chairman of Ada-based Amway Corp., said in a statement to MiBiz. “We have a great group of Michigan-based investors who care deeply about the state and desire to see Michigan businesses prosper. We believe this fund is a unique opportunity for various Michigan-based industries, some seeking to grow and others looking to transition ownership.”
The DeVoses’ Continuum Ventures LLC partnered last year with Grand Rapids-based private equity firm Auxo Investment Partners to form Auxo Michigan Opportunity Fund I.
Investors primarily are high net worth individuals and family offices who were attracted by Auxo Michigan Opportunity Fund I’s focus to invest in family- or founder-led companies in Michigan that are going through a generational transition in ownership.
“For most of the people invested in the fund, they’re from Michigan. An opportunity to take their capital and put it to work — not only producing a great return, but doing good in their home state — that resonated with people in a different way to sending their money to Chicago or New York,” said Jeff Helminski, co-founder and managing partner at private equity firm Auxo Investment Partners.
The fund targets investments to Michigan-based companies that are seeking an ownership transition or looking to grow that are involved in manufacturing, business services, distribution, health care, technology, food and beverage, and consumer products. Investments will go toward companies with $2 million to $20 million in earnings before interest, taxes, depreciation, and amortization (EBITDA).
The Auxo Michigan Opportunity Fund I will make majority equity investments in businesses and consider minority positions with the right opportunity, Helminski said. Investments will occur across the capital spectrum, from growth and buyout capital to subordinate and distressed debt, and the fund will hold companies for the long haul, a difference from traditional private equity funds that will turn over investments within three to five years.
Since forming early last year, the fund made two early investments as fundraising continued: an August 2021 deal for Altus Industries Inc., a Walker-based designer and producer of workstations for the health care industry; and a February investment in Securit Metal Products Co., a 70-year-old company based in Dowagiac that makes rivets used in industries such as automotive, heavy transportation, construction and agriculture.
Auxo Michigan Opportunity Fund I has two potential deals under letters of intent, Helminski said. If due diligence pans out, the fund could close one or two deals by the end of the year, he said. Two more potential deals could close in early 2023.
Helminski expects the fund to deploy all of its capital over two to four years, investing in eight to 12 companies.
“And if we continue to be successful, there will be a Michigan Opportunity Fund II coming behind that,” Helminski said.
Given the economic headwinds forming with high inflation, rising interest rates and increased worries about a recession in 2023, Helminski expects to see plenty of opportunity, especially from business owners who are at or near retirement age and opt to come to market and sell.
“Those demographics are very real,” he said. “I think the world we’re operating in today not only has overall economic uncertainty, but the rising interest rate environment. Both of those things are putting pressure on people and many are coming to that conclusion, which is, ‘Hey, I was getting close. Maybe it’s just time to do it now.’”