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Tecum’s New Fund at $240M, Expects Higher Close

By Patty Tascarella, Senior Reporter, Pittsburgh Business Times

Tecum Capital Team

The U.S. Small Business Administration is on board for the new fund of one of Pittsburgh’s biggest private equity firms, meaning it will match the capital raised on a two-to-one basis.

Tecum Capital Management Inc., based in Wexford, on Wednesday confirmed it has received a license from the SBA to operate its third Small Business Investment Company fund. This fund reached a first close of $79.6 million in early July, bringing the total to $240 million.

But the amount most likely will go even higher to $275 million, marking Tecum Capital Partners III LP as Tecum’s largest fund to date. The SBA’s contribution for SBIC funds is capped at $175 million.

“We’re not at the cap yet,” said Stephen Gurgovits Jr., Tecum’s managing partner. “We expect to have the second and final closing at the end of this month — it might bleed into early October. But I think that will put us up to the cap.”

After the final close, Tecum will invest from the new fund, he said, providing long-term debt and equity capital solutions to lower middle-market companies in the Midwest, Southeast and Mid- Atlantic regions. The average investment size for the new fund will be $5 million to $20 million per transaction, slightly larger than the second fund, where investments ranged from $3 million to $15 million.

The new fund’s investors are largely banks, many of them local.

“It’s probably easier to list the ones we don’t have than the ones we do,” Gurgovits said. They include Morgan Stanley, Huntington National Bank, TriState Capital Bank, NexTier Bank, First Commonwealth Bank, Flagstar Bank, CNB Bank, S&T Bank, Northwest Bank, Dollar Bank, CFG Bank, Cortland Savings Bank and Truist. S&T, NexTier and TriState invested in the second fund, which was raised four years ago. Since the fund is licensed as an SBIC, its bank investors become eligible for Community Reinvestment Act credits.

Tecum Capital originally launched in 2005 as a wholly owned subsidiary of its former bank parent company, F.N.B. Corp., which is not an investor in the fund. Tecum spun out and formed its first SBIC fund in 2013. Along with Gurgovits, its original founding partners include Matthew Harnett and Tyson Smith. They now lead
a 16-person investment team.

Tecum is Pittsburgh’s fourth-largest private equity firm as ranked by capital under management, which was $750 million. There is carryover impact from a locally managed fund as Pittsburgh-area banks and law firms may be brought into Tecum’s deals.