New Mountain's $1.2B Fund Signals Major Investor Bet on 'Defensive Growth'

NEW YORK, NY – January 15, 2026 – In a powerful signal of investor appetite for stability in an unpredictable market, New Mountain Capital has announced the final close of its second non-control private equity fund at $1.2 billion. The fund, New Mountain Strategic Equity Fund II (SEF II), blew past its initial target, exceeding its $1 billion “hard cap” due to overwhelming demand from a global base of institutional investors.

This successful fundraise, nearly double the size of its $640 million predecessor fund from 2020, underscores a growing conviction in the firm’s specialized “defensive growth” strategy. This approach prioritizes investing in businesses within acyclical industries that are shielded from broader economic downturns. The firm also made a significant commitment of its own, with the General Partner and its employees contributing over $150 million, making them the largest single investor in the fund and signaling a strong alignment of interests with its Limited Partners.

The investor base for SEF II includes a diverse mix of leading pension funds, insurance companies, endowments, and family offices, with the majority of investors from the firm's first strategic equity fund returning for the second vintage. This high re-up rate is a testament to the confidence investors have in New Mountain's ability to generate returns by building resilient businesses rather than relying on financial leverage.

The Allure of Acyclical Investing

At the heart of New Mountain Capital's success is its long-standing “defensive growth” philosophy, a disciplined approach that has guided the firm since its founding 25 years ago. Rather than chasing fleeting trends, the firm dedicates years to deep, fundamental research to identify and understand niche sectors that provide essential products and services. These are industries characterized by consistent demand, high barriers to entry, and strong free cash flow, regardless of the macroeconomic climate.

Specific areas of focus include critical sectors like infrastructure services, life sciences and advanced materials, healthcare technologies, advanced data and analytics, specialized software, and technology-enabled business services. By targeting companies in these fields, the firm aims to deliver consistent, high-return performance with low loss rates. This strategy has proven particularly attractive to institutional investors seeking to de-risk their portfolios while still capturing private market growth.

“Since our founding 25 years ago, New Mountain has sought to consistently ‘build great businesses’ in carefully chosen acyclical defensive growth sectors,” said Steve Klinsky, Founder and CEO of New Mountain. “We are proud of the firm and team we have built, as we seek to improve businesses across market cycles as both a control and non-control shareholder.”

The firm's methodology eschews excessive risk and high leverage, focusing instead on operational value creation. This “business building” approach involves partnering with management teams to drive strategic growth, improve operations, and execute targeted acquisitions. This philosophy has been a cornerstone of the firm’s strategy, which it credits for having never experienced a private equity portfolio company bankruptcy or missed an interest payment in its history.

Beyond the Buyout: The Rise of Strategic Non-Control Equity

The structure of SEF II is as significant as its size. The fund is dedicated to non-control, minority-stake investments, a rapidly growing segment of the private equity landscape often referred to as strategic equity. This model offers a compelling alternative to the traditional leveraged buyout, providing a flexible solution for successful, founder-led, or sponsor-backed middle-market companies that need capital to scale but are not looking to sell a controlling interest.

This partnership approach allows business owners to retain control of their company’s direction and culture while gaining access to New Mountain’s capital, operational expertise, and extensive network. For portfolio companies, it means fuel for expansion—whether for entering new markets, developing new products, or making strategic acquisitions—without the heavy debt load often associated with buyouts.

For investors, this strategy provides access to a portfolio of high-growth, proven businesses with a more moderate risk profile than early-stage venture capital. The focus on established companies in resilient sectors further enhances the defensive characteristics of the fund. The oversubscription of SEF II indicates that Limited Partners are increasingly sophisticated in their allocations, seeking partners who can create value through genuine business improvement rather than purely financial engineering.

“New Mountain will continue to execute on our strategy of partnering with leading founder- and sponsor-backed businesses in market niches we proactively select for investment,” said Joe Delgado, a Managing Director who heads the Strategic Equity strategy for the firm.

A Bet on Essential Services: From Accounting to Healthcare Tech

Even before its final closing, SEF II put its strategy into action with a platform investment in Wipfli LLP, a leading national provider of accounting, tax, and advisory services. This move highlights the firm’s thesis perfectly: the accounting sector provides essential, non-discretionary services to businesses, making it highly resilient to economic cycles.

The Wipfli investment is not an isolated bet but a continuation of a proven theme for New Mountain, which has previously made successful control investments in the accounting sector, including in Citrin Cooperman Advisors LLC and Grant Thornton LLP. This deep industry expertise allows the firm to act as a value-added partner, even in a non-control capacity.

Beyond professional services, the capital from SEF II is earmarked for a range of sectors deemed critical to the modern economy. In infrastructure services, investments will target companies maintaining and upgrading essential systems. In life sciences and healthcare technology, the focus is on businesses driving innovation in medical treatment and diagnostics. In data, analytics, and software, the fund will back companies providing the “must-have” digital tools that power commerce and enterprise operations. This disciplined, sector-focused approach is designed to build a portfolio of market leaders that can thrive in any environment.

As Adam Weinstein, Managing Director, President and Chief Operating Officer, noted, “New Mountain has had a consistent focus on its deep research and underwriting approach to defensive growth industry sectors and has continued to grow its broader team to support business building and value creation, which are core tenets of our strategy in both control and non-control settings.” With its new fund, the firm is now poised to deploy that capital, seeking to partner with and build the next generation of leaders in these resilient market niches.