Azalea Blooms With Oversubscribed Fund

Firm: Azalea Capital LLC

Fund: Azalea Fund III LP

Target: $75 million

Amount Raised: $83 million

Azalea Capital LLC recently closed its third fund earmarked for small businesses in the Southeast with roughly $83 million in capital commitments, surpassing the target of $75 million. Azalea Capital launched the vehicle in November 2008.

The Greenville, S.C.-based shop invests in management buyouts, recapitalizations and growth investments in such industries as manufacturing, business services, consumer products, distribution and health care. It looks for businesses generating annual revenues of $10 million to $75 million and EBITDA of $2 million to $10 million. Patrick Duncan founded Azalea Capital in 1995.

Limited partners in Azalea Fund III LP include the South Carolina Retirement System Investment Commission, which committed up to 20 percent of the fund.

Azalea Capital has already made its first investment using Fund III with its purchase of Sage Automotive Interiors Inc., previously the Automotive Body Cloth Division of Milliken & Co. In December, the shop sold Spartan Foods of America, Inc., a portfolio company in Fund II, to Linsalata Capital Partners. Azalea Capital invested in Spartan Foods in March 2005 and realized a return of 6.25x its invested capital on the deal, according to the firm.

The firm also runs the $10 million Azalea SC Fund LP for the InvestSC Board, which oversees an in-state private equity program in South Carolina. That vehicle, a side fund to Azalea Fund II, contributes one-third of the capital made by Fund II in South Carolina-based investments.