CAI Capital’s sixth fundraising gets boost from strong exits

CAI Capital Partners, one of a small number of private equity firms led by women, is approaching a second close of its C$100-million ($75 million) sixth fund on the strength of several lucrative exits.

CAI Capital Partners VI, which raised one-third of its target in May, is expected to hold a second close before the end of the year, Partner Tracey McVicar told Buyouts.

The fund, which has a hard cap of C$125 million, has so far drawn commitments from new and existing limited partners, including family offices, institutions and wealthy investors. Among them is Export Development Canada, a first-time LP.

Founded in 1989, Vancouver, B.C.-based CAI makes control acquisitions of North American lower-mid-market companies owned by founders, typically with Ebitda of $3 million to $10 million, in business services and specialty manufacturing sectors. This strategy, also pursued by Funds IV and V, which raised a combined C$161 million over 2008-2015, primarily targets pan-Canadian opportunities.

McVicar said CAI prefers the Canadian market’s “buyer-friendly environment” relative to the U.S. market, where there is more competition for deal flow and a greater reliance on credit. A local focus also allows the firm to be more “hands on” with portfolio companies, she said, helping to “broaden the capacity of founders and management teams to grow beyond their current ownership.”

Fundraising activity has benefited from recent full and partial realizations by CAI Capital Partners IV, McVicar said. They include last year’s sale of GeoStabilization International, a Grand Junction, Colorado-based provider of geotechnical maintenance services, to KKR. CAI earned a gross multiple of 13x on the six-year investment.

The GSI sale and other exits contributed to Fund IV’s overall 4.8x net multiple of invested capital and 24.9 percent net IRR, McVicar said.

McVicar has led CAI since 2015, succeeding founding partners David Culver, Leslie Daniels, Peter Gottsegen, Peter Restler and Richard Schmeelk, who ran the firm for nearly three decades. Formerly an investment banker with Raymond James and RBC, she joined CAI in 2003.

Female representation in the PE industry’s upper ranks has long been restricted, with women occupying only one in 10 senior positions globally, according to a March report by IFC. McVicar said she is seeing more progress being made by women investment professionals, however, in part because of increased attention being paid to gender disparity issues by the LP community.

McVicar said her senior role with CAI lends greater diversity to investment decisions and gives the firm access to a “larger universe of founders.”

CAI has a team of five investment professionals, including Partner Rob Wildeman, who joined this year. Wildeman previously worked for more than 12 years at Parallel49 Equity and its predecessor Tricor Pacific Capital. Other team members include Partner Curtis Johansson, Director Ashton Herriott and Associate Trevor Riback.

Fund VI, which is expected to invest in six to eight companies, has already completed its first platform deal. In May, it acquired Ansan Traffic Group, a Richmond, B.C.-based provider of traffic management and control services.

Action Item: Learn more about CAI Capital Partners here.