NASHVILLE--(NASHVILLE BUSINESS JOURNAL)--With nearly 30 portfolio companies, many in states like Alabama, Texas, Georgia and Florida, Shore Capital Partners Managing Partner Justin Ishbia knows the Southeast — and he knows where he’s putting his money.
“We have a huge Southeast focus … but we believe Nashville to be the capital of the Southeast,” Ishbia said. “We believe Nashville to be an extreme hotbed for health care talent and we want to double down and invest in that market.”
Shore has plenty of money to invest, having recently closed three new funds worth more than $700 million, including a more than $360 million health care fund, Ishbia said.
Part of that fund, which is Shore’s fourth dedicated to health care, will go toward launching a new Nashville health care company in the coming weeks.
Founded in 2009, the Chicago-based private equity firm has also raised a new $215 million business services fund and a $110 million real estate fund, giving Shore more than $2 billion of capital under management. The firm has 27 portfolio companies across the U.S. employing approximately 17,700 people.
Shore, which has about 16 local employees today, launched its Nashville office in 2019 with six people, including serial Nashville entrepreneur Michael Burcham. Since then the firm has invested in Nashville-based Southern Orthodontic Partners and is set to move into a new office inside the recently constructed Broadwest development on West End Avenue.
Ishbia said the new office is another example of Shore’s commitment to Music City. He said the firm has started an executive leadership program led by Burcham, in which orthodontists and other portfolio company executives from around the country travel to Nashville for leadership and business education, something many medical professionals don’t have when they open a practice.
The new health care company Shore plans to headquarter in Nashville will be similar to Southern Orthodontic, Ishbia said, in that he expects it to grow quickly over the next two to three years. While Ishbia couldn’t disclose much about the new venture because it is under letter of intent, he said company does have a CEO, who recently moved to Nashville.
As for the rest of the $360 million fund, Ishbia said Shore will continue its strategy of looking for small companies to which it can provide back office and strategic support to help them grow into large companies. The firm typically makes $10 million to $40 million initial majority investments in companies with less than $100 million of revenue.
He said Shore is particularly interested in the mental health, opioid addiction and veterinary space and how telehealth can help those sectors scale.
A “meaningful” portion of the health care fund will be Nashville investments, Ishbia said.
“In private equity, people invest in different ways. We’re not trying to find the next bio tech company that will create Moderna. That’s not what we do. We’re investing in stable businesses, often times still owned by the founder, looking to go from a local player to a regional player. That’s our sweet spot,” Ishbia said. “This playbook [is] bringing really experienced executives to relatively smaller business in very attractive markets. Anyone having a beer can go, ‘I see why mental health is becoming more important in the next decade.’ We aren’t rocket scientists to figure that out. … It’s the resources we’re bringing to these companies that makes the difference.”
As for Shore’s future in Nashville, there is a reason the firm is moving to a larger office.
“It’s more people,” Ishbia said. “Between Nashville and other growing cities … people want to live in this area. That’s why we are putting more and more resources into the Southeast, particularly Nashville. By the year 2040, I bet on Nashville being the capital of the Southeast.”