Fundraising is never easy, especially when a firm is engaged in a high-profile lawsuit with one of its peers. The Greenwich, Conn.-based Brynwood Partners, however, managed to reach its $250 million target for its latest fund, Brynwood Partners V, LP.
The fundraising did take over a year, and 11 months separated the firm’s first $150 million-plus close and its final close. Brynwood’s ongoing legal battle with Willis Stein & Partners (see box), likely played a role in delaying the effort, but when all was said and done, the new fund closed with nearly $150 million, or 60%, in commitments from its existing limiteds, combined with another $100 million from new LPs. The new fund is also more than three times larger than its previous investment vehicle, the $80 million, 2000-vintage Fund IV.
“It was our position that one of the reasons [Willis Stein] filed the lawsuit was to disrupt the fundraising and force us to settle,” Brynwood Managing Partner Hendrik Hartong III said. “We’ve raised in excess of $100 million since the lawsuit was filed… Because of the litigation, the limited partners, particularly the new LPs, did extensive due diligence before committing, but ultimately…elected to invest in our fund.”
According to documents filed with the Securities and Exchange Commission, investors include The Netherlands-based Shell Pensioenfonds Beheer B.V., The Federal Express Corp. Employees Pension Plan Trust and J.P. Morgan Investment Management.
While the lawsuits may have held up the firm’s fundraising efforts, it did nothing to squelch deal flow. Since the first close, Brynwood V has already invested in four new platform companies. Most recently, the firm acquired Richelieu Foods Inc., buying the private-label food maker from the Weiss, Peck & Greer funds, which will continue to hold a minority investment.
Meanwhile, the firm also made investments in freight forwarder Inter-Jet Systems, custom plastic and paper bag maker Uniflex (through bankruptcy auction), and Metro Door Inc., a manufacturer of security enclosures for retailers. In the past, the firm has also invested in such iconic names as Aqua Velva and Brylcreem.
Brynwood Partners, founded in 1984, targets the lower middle market. On its Website, it identifies a targeted enterprise-value range of between $15 million and $125 million, and specifies consumer products, light manufacturing, services and specialty retail as the areas in which it focuses.
Also on its Website, Brynwood indicates that as of early 2005, the firm has achieved liquidity events on 10 investments, and in sum has realized an IRR of 30.4% on those deals and returned 4.7x its total investment.