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Eaton advises fundless sponsor GP-led in sustainability sector

Recycling business Ecore International is the focus of what has been described as 'a hybrid of a single-asset recap and an independent sponsor transaction'.

Eaton Partners has advised on a fundless sponsor restructuring centred on a leading recycling business.

Ecore International, a Pennsylvania-headquartered company that recycles scrap rubber into high-value products, has been placed in a fund structure backed by third-party investors, according to a statement.

The LP base of CommonWealth Equity Partners Fund I comprises asset managers, family offices and secondaries funds, which also provided follow-on capital for future acquisitions, the statement noted. The identities of the LPs are undisclosed.

Fund I is managed by newly formed general partner CommonWealth Equity Partners, comprised of partners Robert Bernard and Michael Derosa. Bernard was chief environmental strategist at Microsoft for 11 years, while Derosa remains a managing director with energy and natural resources-focused manager Element Partners.

The chairman and chief executive of Ecore Art Dodge, whose family founded the business, becomes a managing director of Commonwealth while continuing to lead the business, Eaton Partners vice-president David Krueger told sister pubication Secondaries Investor.

“Ecore wanted to raise capital and was not exactly sure what form it might take,” he said. “[We decided] the best route was a single-asset recap that brought in multiple classic limited partners that will bridge them towards doing another recap or potentially raising a commingled fund in the future,” he said, adding that the structure is a hybrid of a single-asset recapitalisation and an independent sponsor transaction.

The deal values Ecore at under $500 million, Secondaries Investor understands.

In May last year John Rife, a partner with law firm Debevoise & Plimpton, noted the growing prevalence of fundless sponsor restructurings: “You have folks raising funds on a deal-by-deal basis and then spinning those assets into a continuation vehicle, de-risking the original investor base and moving the assets into a commingled vehicle going forward.”

One such earlier deal was carried out by Atlanta-based GP Argonne Capital in 2018. Glendower Capital led a consortium of secondaries buyers to restructure six individually acquired assets into a commingled fund in a deal valued at $530 million.