Sarah Claypool is vice president of Bregal Investments, the private equity investment arm of a sixth-generation family holding company. Since 2002, the company has invested close to $10 billion through direct private equity and fund investment vehicles. As part of the firm’s fund investment team—Bregal Private Equity Partners (BPEP)— Claypool is primarily responsible for sourcing, evaluating, recommending and monitoring private equity fund investments for the firm’s global program. Using a selective approach, Bregal’s aim is to build a diversified global portfolio of 25-30 relationships across North America, Europe and select emerging markets. To date, BPEP has made more than $2.5 billion in aggregate commitments and its typical bite size is $25 million to $65 million.
Q. HOW DO YOU THINK PRIVATE EQUITY, PARTICULARLY IN THE MIDDLE MARKET, DRIVES ECONOMIC GROWTH?
Private equity builds better, more efficient businesses, creates jobs, promotes innovation and creates wealth for investors and portfolio company employees. In the middle market, private equity plays a vital role providing companies with capital that may otherwise be difficult to access. This can rejuvenate struggling businesses or help healthy companies realize their growth potential. Of course, the most successful private equity firms provide more than just capital. They generally have deep operating and sector expertise and work with management to build better businesses that expand into new markets, develop new products, train or hire employees, improve operations and/or make acquisitions. As a result, portfolio companies can increase their sales and profitability, create value for shareholders and ultimately have a positive impact on the economy.
Q. WHAT INVESTMENT TRENDS ARE YOU SEEING BOTH DOMESTICALLY AND ABROAD FOR THE MIDDLE MARKET?
I think the biggest trend we see on a day-to-day basis is the increased focus on the lower middle market, especially in the U.S. As competition for deals at the upper end of the middle market continues to intensify, many private equity investors have turned to the lower middle market to boost returns. Of course, lower middle-market investing is further out on the risk curve, but if you have access to the best managers with the right skills, and proof of those skills through a deep, consistent track record in the space, I believe it’s a very important component of any private equity portfolio.