Barrel Rate Capital provides capital to private equity sponsors in the “small cap” end of the lower middle market.
The firm will generate outsized risk-adjusted returns while structuring against downside scenarios and utilizing minimal amounts of leverage.
Strategy
In general, historical evidence indicates that returns in the private markets do not persist over time. Managers and market segments that perform well initially, when they are smaller, less efficient, or less affected by competition, tend to perform less well as they grow and come to offer little to no alpha over broad-based benchmarks.
At its core, Barrel Rate seeks to generate an outsized multiple of capital by partnering with private equity general partners and independent sponsors who are able to identify proprietary opportunities, structure transactions with downside protection, and capture excess returns by growing their companies to a scale where market efficiencies produce excellent exit prospects. These dynamics exist independent of market cycles or debt availability.
While Barrel Rate will invest primarily in the United States, we also will consider opportunistic investments in other developed markets, such as Europe, while maintaining our focus on small-cap and emerging managers.
Identify, diligence, and partner with investors in less efficient market segments with specialized strategies and strong financial alignment
Capitalize on favorable market conditions and structuring dynamics to reduce the J-Curve effect and generate exceptional net returns
Source and evaluate individual transactions acquired at advantageous purchase price multiples that have downside protection and uncapped upside
Team
Jefferson Stone
Jeff leads the firm’s investments and operations, and has worked in the private capital markets since 1997. He helped shape Probitas Partners’ pioneering secondaries market-making program and spent nearly a decade on the investment team of the William & Flora Hewlett Foundation, overseeing private equity and alternatives commitments of over $3 billion. Since 2015 he has served on the Board of Axiom Asia Private Capital.
MBA, The Wharton School — Palmer Scholar and Siebel Scholar. B.A., UC San Diego, Magna Cum Laude. Former instructor, ILPA Due Diligence Module.
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A player’s Barrel Rate is the strongest predictive statcast measure when forecasting future home runs.
For a baseball to be “Barreled,” a batted ball requires an exit velocity of at least 98 mph. At that speed, balls struck with a launch angle between 26-30 degrees always garner Barreled classification; for every mph over 98, the range of launch angles expands.
Why does this matter and how does it apply to private equity?
We take limited data, analyze it rigorously, scour the market to evaluate and understand the competition, wait patiently for the perfect pitch, and then give our investors the best chance to hit a “home run.”
Fortunately, we’re allowed an unlimited number of strikes before we choose to swing.
Contact
Let’s connect.
For sponsors seeking capital and limited partners evaluating the strategy.