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The Pennsylvania State Employees’ Retirement System is committing $65M to BV Investment Partners (BVIP) Fund XII, citing the Boston-based private equity manager’s history of strong returns and founder-led tech investments.
During a recent board meeting, Kyle Reinfeld, PennSERS’ managing director of investments, said due to the Boston-based BV’s track record, there’s a lot of investor demand for allocation to this opportunity. He added that while the allocation is smaller than the system’s typical commitment, it would make the pension system “the largest new LP relationship for BV” and could pave the way for larger commitments in future funds.
Stephen Balucha, the pension fund’s portfolio manager for private markets, said the BVIP Fund XII will target founder-owned businesses where BV often provides the first institutional capital. Attributes the BV team seeks include “a high level of recurring revenues, significant client workflow integration, revenue and earnings growth potential, platform scalability, attractive valuations for scaled businesses, and a wide universe of potential strategic and financial buyers.”
Balucha added that Fund XII will continue BV’s focus on control-oriented equity investments in lower-middle-market companies across tech-enabled business services and IT solutions. “This strategy has generated attractive returns across the prior four funds, resulting in a 30.3% net IRR and a 1.8 times net TVPI.”
BV employs a thematic investment approach, conducting both top-down and bottom-up research to identify compelling sectors, said Balucha. Each theme, he said, is staffed by “a focused team of three to four investment professionals who engage in deep market mapping, industry research and proactive relationship building.”
Balucha also highlighted the firm’s consistent first-quartile results, noting BV has produced above median multiples in each fund resulting in a 1.8 times TVPI, as well as a low aggregate loss ratio of 2.7% compared to the buyout average of 7%. He also note that the firm outperforms the Russell 3000 on an aggregate and individually basis.
During the meeting, consultant StepStone Group said it classifies BV as a diverse manager, noting the opportunity aligns well with the pension system’s portfolio.
“The returns are phenomenal, and we’ve had a lot of respect for Vic and his team and their willingness to invest a lot of their own wealth back into their funds,” said Matthew Roche, a partner at StepStone. “We think this is an interesting opportunity.”
Vikrant Raina, the chief executive officer of BV Investment Partners outlined the firm’s thesis around technology services — a segment he described as both essential and underappreciated in the broader tech ecosystem. “The dirty secret about technology is that for every dollar you spend on software or every dollar you spend on hardware, you’ll spend $3 on services to make that software and hardware work,” he said. “We play in that area. So it’s a market that’s three times the size.”
He contrasted BV’s focus on solutions businesses with the more common software-oriented investment strategies. Raina also noted the firm targets average purchase multiples of about 11–11.5x EBITDA, keeps leverage at roughly 30%, and requires that each company achieve a 10x EBITDA valuation within 12 to 15 months of ownership.
He outlined the firm’s operational playbook, which focuses first on professionalizing founder-led companies, then driving customer acquisition and product innovation. The goal, Raina said, is straightforward: “We feel very confident that … we can double the revenues of the business in our time of ownership [and] almost triple the EBITDA … with very little use of leverage and no reliance on public markets or IPOs.”
Raina also highlighted BV’s ESG approach, which he said allows the program to benefit from diversity of opinion internally. He also described the firm’s commitment to community engagement and its aspiration to become the largest investor in its own funds, saying “We’re marching on towards at some point … being the largest investor in our own funds.”
