About Kingswood Capital Management

• Founded: 2003

• Headquarters: Los Angeles, California

• AUM: approximately $7bn (as of 2024)

• Strategy: Middle-market buyouts, business services and healthcare

• Track record: Fund III closed at $1.6bn in 2018

• Leadership: Founded by Thomas Saylak and John Sasson

Kingswood Capital Management closed two oversubscribed vehicles totaling $4bn in commitments. Fund IV, the firm's flagship middle-market fund, raised $3.1bn against a $2.25bn target—a 38% oversubscription. The firm also held a final close on its debut small cap vehicle, Small Cap Fund I, which absorbed the balance of the $4bn total. The dual close marks a significant step-up from Fund III's $1.6bn close in 2018, reflecting both LP appetite for Kingswood's healthcare and services focus and the firm's expansion into smaller check sizes.

The most notable aspect of this raise is Kingswood's decision to launch a dedicated small cap vehicle rather than expanding Fund IV further. That split suggests the firm is testing whether its sourcing and operational approach translates down-market, where competition from smaller firms with lower cost structures is intense. Middle-market funds that add small cap sleeves often struggle with deployment pace mismatches—larger funds move slower, but small cap deals require speed and volume to hit return thresholds.

If Small Cap Fund I deploys at the pace typical for sub-$50m equity checks, Kingswood will need to close 15–20 deals to put meaningful capital to work, a materially higher deal count than Fund IV's likely 10–12 platforms. Whether the firm's deal team has scaled accordingly, or whether small cap will stretch resources thin, is worth watching over the next 18 months. Comparable firms like Sverica and Abry have run parallel small cap and core vehicles, but with mixed results on IRR convergence across fund sizes.

Source: AltAssets