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DCA Capital in the News

March 1, 2006
Dow Jones LBO Wire

DCA Capital Kicks Down Door Of Martial Arts Co.

DCA Capital Partners, liking the fighting spirit of Kovars Martial Arts Inc., has provided between $750,000 and $1.25 million to fuel the California–based karate school’s growth plans around New York City.

DCA Capital invested that amount in the Carmichael, Calif.–based chain of martial arts studios early last month, and is talking with another buyout shop about co–investing an additional $3 million to $5 million.

“The idea is to provide some capital to expand into other geographies,” said DCA Capital Partner Jeremy M. Wolfe, who didn’t name the other firm.

Kovars has 16 locations in the Sacramento, Calif., area and a couple others around New York City, where the school wants to expand, Wolfe said.

DCA Capital invested from its debut, $10 million fund, which closed early last year, Wolfe said. The Kovars management team — Dave Kovar, Tim Kovar and Rick Campbell — kept a majority stake.

Kovars instructs children and adults on an original fighting method that incorporates jiu–jitsu, kick–boxing, tae kwon do and other styles. The school also offers business classes and back–office software programs to karate schools.

Roseville, Calif.–based DCA Capital invests in growing businesses in Northern California, Nevada and Arizona. The private equity arm of DCA Partners, the firm has enough money for three more deals from its debut fund. It hopes to launch DCA Capital Partners II LP after the summer, Wolfe said.

The second fund will have a $50 million to $100 million target and will look to invest $3 million to $10 million in each deal.

While the first fund was designed as a co–investment vehicle, the second fund will look to do more investments on its own. However, for larger deals it might co–invest alongside partners like Goldman Sachs & Co. or ABS Capital Partners, Wolfe said.

DCA Capital has provided growth capital to a total of four businesses, investing about $1 million in each. The other three businesses are information technology outsourcer Ensynch Inc., nursing provider Valley Healthcare Systems Inc. and software provider Environmental Support Solutions Inc.