Brazos nabs $700M for third fund

Brazos Private Equity Partners has closed a third fund, garnering commitments of more than $700 million to buy family-controlled businesses in the southwestern United States.

Brazos Equity Fund III closed at its hard cap level, well above an initial target of $600 million, according to the firm.

The fund-raising effort took about six months, says Randy Fojtasek, co-founder and partner with the firm. He says that a substantial number of Brazos Private Equity’s prior LPs re-upped, while a number of new investors also committed. Prior backers have included Aetna Inc., Massachusetts Mutual Life Insurance Co. and Robeco Group.

Fojtasek says that he remains optimistic about the deal environment despite Wall Street’s recent travails. “We believe it’s a great time to have fresh capital,” he says. “This kind of upheaval in the market tends to create substantial opportunities.”

Fojtasek was also bullish about the firm’s region of emphasis. “The Southwest is a robust and vibrant part of America,” he says. “We think it will continue to see growth that outpaces most other areas of the country.”

Dallas-based Brazos, a mid-market shop, acquires companies with enterprise values of between $50 million and $400 million. The firm invests in the manufacturing, consumer, health care, distribution and financial services sectors. The firm seeks to invest between $15 million and $100 million in companies generating annual revenue of between $50 million and $500 million.

Brazos Private Equity was co-founded in 1999 by Fojtasek and Jeff Fronterhouse. Fojtasek previously was the CEO of building products maker Atrium Cos. while Fronterhouse was a principal of Hicks Muse Tate & Furst.

The shop’s first fund closed in 2000 with $250 million in commitments. Its second fund closed in 2005 with commitments of $400 million.

As for performance, Brazos Private Equity said in a press release that the distributions have “substantially exceeded” invested capital for fund I and that fund II is fully committed.

Portfolio companies include Ancillary Healthcare Solutions, a provider of pharmacy benefit management services and other medical products and services; Collins Financial Services, a purchaser and re-seller of consumer debt; Ennis Paint, a traffic paint and road marker supplier; and Fuel Systems, a fuel tank manufacturer. —Michael Baron