Bunker Hill Closes First Fund

After a year and a half on the road, the former BancBoston Capital deal pros that formed Bunker Hill Capital have closed their first fund.

Bunker Hill Capital LP

closed on $125 million at the end of the first quarter. Three of the young firm’s managing partners, Mark DeBlois, Robert Clark and Theresa Nibi, came from BankBoston to start up the firm in 2003. The team built up a track record of two dozen deals before splintering. The firm has one west coast team member, partner Brian Kinsman, who joined the firm a year ago.He is based in San Diego,

Bunker Hill’s best known deal to date was the buyout last year of Papa Gino’s Holdings Corp., the famed New England pizza maker, which it bought from BancBoston. Boston-based Bunker Hill also owns the D’Angelo sandwich chain. The firm’s only deal announced so far this year is of Specialty Coating Systems, which it bought in January. The Indianapolis-based company, which supplies high-performance conformal parylene coatings to components in the medial, electronics and other industries, was a former business unit of Cookson Group plc. Bunker Hill also has a deal in the hopper, a west coast-based company which it will acquire by the end of May, said DeBlois.

DeBlois said the firm started the fundraising process about 18 months ago, with a target of between $150 million and $200 million. It will make controlling investments in lower middle market companies with enterprise values ranging from $20 million to $150 million and revenues from $30 million to $300 million. Bunker Hill will be deploying about $10 million to $20 million per transaction. Its industry focus is broken out into four segments: business services, industrial products, specialty retail and consumer products.

While some firms are raising funds in just three month, it took Bunker Hill a little longer, but DeBlois wasn’t discouraged. “Any first time funds are going to take longer to raise than you’d expect,” he said. Moreover, “There were a lot of re-ups at larger funds, especially during 2005, which made it even more of a challenge.”

Although it is a generalist fund, DeBlois said the firm is attractive to LPs because of its spot in the lower middle market, where he and his partners have spent their careers, targeting deals under $100 million. The lower end of the spectrum “is really our core market and a very inefficient end of the buyout space,” said DeBlois. Bunker Hill looks at between 400 and 500 deals per year and only invests in two or three companies, he added.

For its next several funds, DeBlois said Bunker Hill will continue raising funds in the $125 million to $300 million range. —M.C.