Atlantic Street Eyes $100M For Fund II

Atlantic Street Capital is poised to begin fundraising for its sophomore special situations fund with a target of $100 million, possibly kicking off the marketing effort as soon as this month. The Stamford, Conn.-based shop is aiming to hold a first close around year-end at the earliest.

The firm closed predecessor fund Atlantic Street Capital I early in 2008 with $45 million; Morgan Stanley Alternative Investment Partners was the sole backer of that vehicle. It originally hoped to raise an additional $25 million for that pool in the second half of last year, but when the fundraising market collapsed, Atlantic Street Capital decided instead to close Fund I and focus on doing some deals and adding staff, said a source familiar with the situation.

Pennsylvania-based placement agent Ariane Capital Partners has been hired to help raise the new fund.

Atlantic Street Capital takes controlling equity positions in lower mid-market companies requiring significant operational improvements. It usually invests $5 million to $15 million of equity in companies with annual revenue of between $30 million and $250 million in the consumer products, services, manufacturing, distribution and logistics sectors. Its first three investments were in food production and distribution.

Peter Shabecoff founded Atlantic Street Capital in June 2006. Prior to that, he was a partner at North Castle Partners, a mid-market buyout firm based in Greenwich, Conn., from 1999 to 2006.