Bruckman Rosser Sherrill nearly halfway to raising fund III

Bruckmann Rosser Sherrill & Co. appears ready to hold a first close on $250 million for its third fund, which is targeted at $600 million.

The general partners of the New York-based shop plan to commit $90 million to the fund, or a relatively high 15% of the target. The firm intends to charge the standard carried interest of 20%, along with a 2% management fee.

The firm’s expertise lies in consumer products and services. With the new fund, the firm aims to make 15 to 25 investments of an average size of $20 million to $40 million. It is the smaller end of the market where the firm has had the most success. The firm has generated a 36.6% gross IRR and a 3x multiple of capital on its 30 transactions in smaller consumer products and services companies, according to statistics the firm has shown to LPs. It defines those companies as having enterprise values less than $250 million.

Notable companies in the firm’s portfolio include Au Bon Pain, California Pizza Kitchen, New York Sports Clubs and Totes-Isotoner.

The firm is pitching LPs with a team that’s been stable, as 11 of its 17 investment professionals have remained in place since 2000.

The founders—Bruce Bruckmann, Harold Rosser and Stephen Sherrill—compiled a stellar track record at CVC in the late 1980s and early 1990s. CVC I, active between 1986 and 1991, put $336 million to work in 16 companies and posted a gross IRR of 91% and a 5.1x gross multiple of capital, according to numbers supplied by Bruckmann Rosser Sherrill. CVC II made eight investments worth $76 million, and posted a gross IRR of 49% and a gross multiple of capital of 8.3x.

The most recent fund, Bruckmann Rosser Sherrill II, has been deployed in 27 investments worth $637 million and so far has generated a return of 18 percent. That fund’s investment period ended in 2006. One of the firm’s home runs was California Pizza Kitchen. The firm invested $17 million in the company in 1997, and ultimately received $126 million following an IPO in August 2000.