Brazos spinout CenterOak launches third pool into tough market

CenterOak Partners, launched by a group of ex-Brazos Private Equity executives, wants to raise its largest fund yet in the challenging fundraising environment, sources told Buyouts.

CenterOak is among a group of newer managers hitting the fundraising markets at a time when most limited partners are content to stick with their deepest relationships. Emerging manager fundraising has consistently declined over the past two years, with first-time funds reaching about $25 billion last year, compared with $47.6 billion in 2022, according to Buyouts data.

The firm, launched in 2015, is targeting around $850 million for Fund III, sources said. The pool was expected to have a first close this month, though it’s not clear if that has happened.

A spokesperson for CenterOak declined to comment. CenterOak invests in services across industrials, business and consumer, according to its website. The firm looks for businesses with enterprise values of $50 million to $500 million and EBITDA of $7 million to $35 million, the website said.

Recent Performance Data

• Fund II (2020 vintage): Net IRR: 60.4%; Net TVPI: 1.95x; Net DPI: 0.00x
• Fund I (2015 vintage): Net IRR: N/A; Net TVPI: 2.1x; Net DPI: 1.63x

Source: Buyouts data for Fund II as of Sept. 30, 2023, and for Fund I as of Dec. 31, 2023, citing public pension data. Subscribers can view here.

Randall Fojtasek, co-founder of Brazos Private Equity in 1999, launched CenterOak along with fellow Brazos alumni Jason Sutherland, co-managing partner; Michael Salim, general counsel; and Lucas Cutler. The other partner, William Henry, formerly was CEO of a Brazos portfolio company and led his own advisory shop.

Cutler left CenterOak and joined Sterling Group in 2021 to launch that firm’s small-cap strategy called Foundation Fund. The firm closed its debut Foundation Fund on about $636.6 million last year, Buyouts reported.

CenterOak closed its debut fund on $420 million in 2016 and Fund II on $690 million, beating its $575 million target.

The firm earlier this year has announced at least two exits, both which CenterOak formed in 2020. The firm agreed to sell SurfacePrep, which distributes surface enhancement services, to Nautic Partners, according to a statement.

And CenterOak agreed to sell auto body repair services platform CollisionRight, to Summit Partners. CenterOak formed the platform in 2020, appointing Rich Harrison, co-founder of former CenterOak portfolio company TruRoad, as CEO.

Buyout, growth equity, venture capital, secondaries and other private equity funds raised $88 billion of capital by the end of March, down 34 percent from $133 billion a year earlier, according to Buyouts data. This marked the first time that quarterly inflows have fallen below $100 billion since 2020.