Firm: Blue Wolf Capital Management
Target: $100 million – $160 million
Amount raised: $33.5 million – $43.5 million
Limited partner: Johnnic Holdings (JSE: JNC)
Since leaving the City of New York’s Office of the Comptroller early last year to put together a new private equity firm, Adam Blumenthal and Josh Wolf-Powers have worked to secure deal flow and establish a base of capital to start doing deals. Their firm,
South African investment firm
The firm will use the funding from Johnnic to do deals before heading out to fund raise to the larger LP community. People familiar with the firm’s fundraising efforts say Blue Wolf’s new fund is expected to raised between$100 million and $160 million. According to documents filed with the Johannesburg Stock Exchange, Johnnic has acquired a 51% interest in Blue Wolf and is committed to $40 million or 25% of the inaugural fund’s total value, whichever is greater. Johnnic’s commitment is also contingent on Blue Wolf raising a fund of at least $100 million.
New York-based Blue Wolf will invest in companies that have federal, state or local governments as customers or that are involved with government or government agencies in a substantial way, that have employees represented by labor unions and distressed companies in need of restructuring. The firm will target transactions between $10 million and $150 million. The middle market is a crowded field, but Blue Wolf is banking on their focus putting them in a market segment that will weed out a lot of potential competitors. Still, the firm says it understands that run-of-the-mill middle market firms brimming with cash are a threat.
“There’s a phrase which limited partners use which is JAMBO: Just Another Middle Market Buyout firm,” says Blumenthal. “We’re not a JAMBO. We have a unique set of experiences that no other team can lay claim to. If you’re a JAMBO, all you can do is compete on price; that’s why their returns aren’t good and LPs try to stay away from them, but competition from people who can always comp on price is always a risk.”
The firm has been looking for deals for over a year now and Wolf-Powers says that the deal flow is very strong. While he declined to say how soon the current capital might be invested, he said the money would be invested over a relatively short period of time. Blumenthal says that having some working capital to do transactions before beginning formal fund raising makes sense and has been used by other successful buyout firms, such as
Blumenthal and Wolf-Powers are making the jump from the LP side to the GP side of the private equity world, where they have most of their experience. Before working for New York City, Blumenthal led