How Otro Capital Blew Past Targets to Raise $1.2B for First Fund

Now that Otro Capital has finished marketing for its first fund after more than doubling its $500 million target, the private equity firm plans to make 10 investments targeting sports teams and middle market companies. Otro typically invests north of $75 million per deal, but it can scale much higher if it wants, a person familiar with the situation told Sportico.

Otro, which means “another” in Spanish, said Tuesday that it had raised $1.2 billion over about two years, money that includes Otro’s first fund, a side-car pool as well as capital for portfolio company Alpine, the person said.

The pool is the biggest fundraise by a debut, sports-focused buyout fund, according to Otro.

Brian Levine of PJT Park Hill advised on the fund. A.J. Frey and Stefan dePozsgay of law firm Gibson Dunn provided legal advice. “We are thrilled with our LP base that we ended up with,” said Alec Scheiner, an Otro co-founder and partner.

Otro’s fundraise comes during a difficult time for private equity firms. A slow deal market means PE firms have had a hard time exiting their investments, causing distributions to slow. This, in turn, has put a strain on fundraising.

First-time managers typically need more time than established groups to explain their story, often staying in the market for 18 to 24 months or longer, according to data from law firm Shulman Rogers.

Scheiner said Otro understood the market was challenging, but the continued evolution of sports investing helped Otro’s raise. Many LPs now understand and accept sports as an asset class, although some investors did choose to sit on the sidelines and were waiting to see how the sector evolves, he said.

Besides being great businesses, Scheiner said, sports also provides the best customer relationships. “It’s one of the few businesses where even when things don’t go well with your product, your customers remain loyal,” he said.

The track record of Otro’s executives also helped. Otro’s founders—Scheiner, Brent Stehlik, Niraj Shah, Isaac Halyard—all hail from RedBird Capital, the successful PE firm founded by Gerry Cardinale.

Launched in 2023, Otro is a lower- to middle-market buyout fund. It has so far made three platform investments: BWT Alpine F1 Team, Two Circles and FlexWork Sports. (Otro has received inbound interest for Alpine but is not looking to sell its 24% stake, although it’s open-minded to conversations, the source said.)

Otro is a buyout fund and will seek controlling stakes, or shared control, although it is comfortable with minority stakes. It is not interested in passive investments. “We are looking for valuable sports businesses that have operational upside and [have a] need for capital,” Scheiner said.

Otro’s fundraising comes just weeks after it clinched a landmark deal with the University of Utah to take an equity stake in a new Utes commercial entity. Trustees for the University of Utah have greenlit the deal, Sportico reported in December, though a Congressional committee wants more details about it. Otro declined to comment about the Utah deal.

The PE firm also didn’t disclose fund investors but said the LPs include pension plans, retirement systems, wealth platforms, endowments, foundations, family offices and strategic investors. Some well-known sports investors also took part, but Otro didn’t give names.

“For many of [the LPs], not all, but for many of them, we were their first sports investment,” Scheiner said.