Buffalo-based Summer Street Secures $187M

Firm: Summer Street Capital

Fund: Summer Street Capital II

Target: $150 million

Amount Raised: $187 million

Placement Agent: Champlain Advisors

Small-market buyout shop Summer Street Capital has closed its latest diversified fund with $187 million in commitments, exceeding a $150 million target.

It took about seven months to raise Summer Street Capital II with the help of placement agent Champlain Advisors. Backing the fund are 52 limited partners, including insurance companies, banks, some funds of funds and state pension funds. Expect several of them to co-invest alongside the firm in Fund II deals.

Investors in the predecessor fund, closed in 2000, included JPMorgan Chase, HSBC Capital and New York State Common Retirement Fund, but it’s not clear if they re-upped. The number of LPs is down from the first fund, which had 76 LPs, many of them wealthy investors.

Summer Street targets buyouts of companies generating sales of between $20 million and $100 million. It looks to make equity investments of between $5 million and $30 million in each deal. The firm doesn’t have a specific geographic focus or industry focus. For larger investments, the firm has teamed on transactions with other small-market players, including New Jersey-based MidMark Capital, Chicago-based Prairie Capital and Avon, Conn.-based Ironwood Capital. Having a larger fund will help the firm do larger deals on its own, said co-founder Brian D’Amico.

Roughly a third of the firm’s deals are non-control transactions, and in many the firm is cashing out a family member. About half of its exits have been to other sponsors, while half are to strategic buyers, said D’Amico. The firm bought 15 companies through its debut fund. Ten of them have been sold or substantially exited so far. Summer Street’s most recent realization involved fellow Buffalo, N.Y.-based company Reichert Inc., which makes diagnostic tools for ophthalmologists, optometrists, and retail eye care centers. It bought the company from Lica Microsystems AG in December 2002, and later added two product lines, a move that helped to more than double sales.

Other notable companies in a diverse portfolio include a pair of frozen meat providers, Topps Meat and Belmont Meat Products; manufacturing and distribution software maker MaxQ Technologies; waste hauling and disposal company Interstate Waste Services; recreational boat maker Carolina Skiff; and wellness center operator Healthtrax.

Summer Street’s four founders are Jennifer Chalmers Balbach, a former consultant with Bain & Co; Gary Hull, a former manufacturing company executive and founder of the Upstate Venture Association; Michael McQueeney, another former manufacturing executive; and D’Amico, a former M&A banker. The firm has 10 investment professionals, three of which were added in the last year.

The Buffalo, N.Y.-based firm now has about $300 million under management. The firm raised its $100 million first fund with the help of the SBIC program in 2000.—M.C.