Dealmakers recently told Mergers & Acquisitions that they expect to see more continuation funds in 2022. St. Louis-based Thompson Street Capital is getting a head start on the competition by closing its first continuation fund.

A continuation fund is where a PE firm rolls over investments in a fund that’s nearing the end of its lifecycle, into a new fund that carries on some of the same investments from the old fund. This allows PE firms to hold on to companies beyond the standard 7-year to 10-year life of a fund instead of selling prematurely. It also allows investors to capture returns from those longer-life assets as well.

Thompson Street did that with two companies. The firm rolled over Revenue Management Solutions out of Fund IV and BCM One Holdings out of Fund V. Carlyle’s AlpInvest led the funding. The deal is valued at $1.2 billion.

RMS offers healthcare payment technology services, while BCM provides businesses with technology infrastructure such as network management, digital voice communication and digital invoice management. Businesses are looking to add new technologies, either organically or via acquisitions, as part of their digital transformation strategies.

Thompson Street’s move is a harbinger of what’s to come in 2022.

– Demitri Diakantonis