Argosy Capital, Wayne, says it has raised $180 million from private investors to buy small companies through a new fund, Argosy Investment Partners IV LP. (The original version of this item incorrectly said the fund would also buy real estate, but it won't; Argosy has a separate real estate fund.)

Cofounder John Paul Kirwin 3d says Argosy's private equity funds focus on "lower-middle market investing" in industrial and service companies. Similarly its real estate fund focuses on apartment complexes and neighborhood shopping centers. "We thinks those are less-efficient markets," with more opportunity for profit, "because the transactions aren't large enough to attract the big funds, but they are big enough that you're not competing with individual investors. And they're businesses where we can add value, with expertise from our operating partners."

Argosy has raised $500 million in the 20 years since engineer Kirk Griswold, lawyer Kirwin and investment manager Bruce Terker founded the firm. Griswold and Kirwin remain active, with an expanded staff.  Past investors include Bryn Mawr Trust Co. and National Penn Bank, along with three firms - Merill Lynch, MBNA, and Fleet Bank - that are now part of Bank of America.

Of the half billion invested, "a significant part is our own capital," Kirwin told me. "That makes us much more focused on return of our capital than we are on assets under management and management fees." The group considered raising a $200 million+ fund that would more likely atract big pension fund investors, "but the consensus was no, we like this area of the market, and we like the returns," which he said had averaged around 15 to 20 percent "over a long period of time."

On the private-equity side, Argosy lists current investments in 37 companies. Local examples include Philadelphia-based lighting-maker Simkar Inc.; Malvern-based office-trailer provider Vanguard Modular Building Systems; financial consultants Solomon Edwards Group of King of Prussia; outsourcer Advanced Call Center Technologies LLC, Berwyn; Dayton Parts LLC,  a Harrisburg truck-maker; Sure Fit Inc., Allentown, which makes furniture slipcovers. For examples of firms where Argosy has cut costs, reorganized and sold at a profit, read here.

The firm's real estate fund owns 10,000 housing units, mostly small and midsized apartment buildings and senior complexes. It's also accumulated grocery-anchored shopping centers, a few office buildings, "and one condo deal, God help us," Kirwin told me.

Private-company deals have been "very slow" since 2008, with owners unwilling to sell at discount prices. Argosy has lately bought land in sites like Ontario, Calif., from the Federal Deposit Insurance Corp., which liquidates failed bank assets. "There's going to be a lot more opportunities to make opportunistic investments over the next few years," after banks start admitting their full losses on inflated deals from the mid-2000s, Kirwin concluded.