Asset manager Xponance has partnered with the former president of Northern Trust Asset Management for its latest investment.
The firm has taken a minority stake and made a fund commitment in the Copia Group, a middle market private credit firm founded by Shundrawn Thomas.
This is the sixth investment made by Xponance’s alternatives platform, which launched in 2021. Xponance partnered with Investcorp’s strategic capital group to launch XAlts, which invests in minority- and women-owned firms.
“The Copia Group fully aligns with what we’re trying to accomplish,” said Xponance CEO, CIO, and founder Tina Byles Williams. “Shundrawn has a long track record of successful leadership prior to the Copia Group. He is a guy with a Midas touch. Most things he has put his hand to he has succeeded at.”
Xponance will make a minority investment in the Copia Group, while also providing a commitment to its private credit fund. This will be done through Xponance’s alternatives subsidiary, which invests in diverse and emerging managers.
This investment is the platform’s first emerging manager commitment, according to Byles Williams.
“This is a tough fundraising environment,” Byles Williams said. “We’re investing despite this tough fundraising environment and we’re finding quality opportunities.”
According to Byles Williams, the Copia Group’s focus on credit, on top of its portfolio construction and focus on the middle market, made it an attractive opportunity. The firm has already made investments in other asset classes using the XAlts platform; As a result, the Copia Group provides some diversification.
Not to mention, private credit is having its day in the sun. Thomas noted that just over a decade ago, 70 percent of the middle market lending deals would have been done by traditional banks. Today, that’s 11 percent.
“The largest amount of capital for lower middle market companies has moved away,” Thomas said. “People talk about the growth of private credit, but it’s like two different marketplaces.”
He added that the average size of a private credit deal is about $40 million. The average size of a Copia Group deal will be about $11 million, he added. The firm will invest in sectors like business services, consumer and food, healthcare, and select areas of financial services.
Thomas noted that Copia is focused on finding businesses run by women and ethnic minorities to invest in. “The great businesses they’re building and investing in are unfortunately still devoid of financial and social capital,” he said.
Thomas launched the firm in 2022 alongside Anthony Hoye, the former director and senior credit officer in Bank of America Merrill Lynch’s corporate and investment banking group. Thomas noted that he spent the first year working on building a team and ensuring that they were aligned in terms of values.
“Only then do you begin to turn your attention to identifying investors who will hopefully be engaging with you over a long period of time and then building the pipeline,” he said.
