Bass Protege Raises Third Fund

Firm: Fund: Alpine Investors

Target: Alpine Investors III

Amount Raised: $125 million

Placement Agent: $83 million

Legal Counsel: Hogan & Hartson LLP

Yet another Robert M. Bass vet is on the fundraising trail, as Graham Weaver’s Alpine Investors is raising its third fund, according to Securities and Exchange Commission filings. The San Francisco firm is seeking as much as $125 million and has already raised a sum as of $83 million based on information in the documents. The firm anticipates reaching its target at some point in the next month.

Alpine invests in the small- and micro-cap markets, generally targeting companies with cash flows of between $5 million and $20 million. The firm operates without a set-in-stone sector focus, and has made acquisitions in segments spanning the logistics, education, marketing and retail sectors, among others.

The micro-cap space, while under the radar, has generated its share of enthusiasm in recent years. With a smaller population of GPs targeting the market, and sale processes that aren’t nearly as efficient as higher priced deals, there has been a budding interest in micro-cap investing.

The Riverside Co., for instance, launched its first vehicle dedicated to the micro-cap space last October, and has received commitments from the likes of the Ohio Public Employees’ Retirement System (Ohio PERS), among others.

“Just about 93% of the companies in the U.S. have less than $50 million of revenues, so there are simply more opportunities to find investments,” Weaver said.

He also added that Alpine’s deals have all come on a proprietary basis.

Alpine’s first fund was launched in 2001, and the firm raised $53 million for the vehicle. The second fund was closed in 2003, in time for equity investments in Georgia retailer Windsor Jewelers and financial services company National Credit Acceptance. The firm amassed $69 million for Fund II. Weaver, who founded Alpine Investors, noted that the firm’s latest fund will finish oversubscribed.

Weaver had previously served as a vice president at Oak Hill Capital Management, the private equity investment arm of Robert M. Bass.

The new Alpine fund joins a number of other firms with Bass DNA in the fundraising market. Texas Pacific Group is the most notable of these, and is reportedly seeking around $14 billion for its latest fund, while The Halifax Group and Colony Capital are also reported to have had funds in the market recently.

Oak Hill Capital, meanwhile, closed its first institutional fund last year raising $2.5 billion, $250 million of which came from the Bass family. —K.M.