Canadian Shop Seeks To Broaden Investor Base

Clairvest Group Inc., a Toronto-based merchant bank with a taste for casino deals, is seeking C$400 million ($398 million) for its fourth North American buyout fund, and sources close to the firm say it is seeking investors from outside of Canada for the first time.

The firm has so far raised C$297 million for Clairvest Equity Partners IV LP. The hard cap for the fund is C$500 million. The firm has hired NovaFund Advisors, a Rowayton, Conn.-based placement agency, to help it raise capital from non-Canadian investors, primarily in the United States.

Founded in 1987, Clairvest Group is a public company that is 81 percent owned by its management and board. The firm has committed C$100 million to Fund IV and has the right to commit C$25 million more. It committed C$75 million to its previous fund, a 2006 vintage, C$300 million pool of capital.

Clairvest Group typically invests 50 percent of its fund in Canadian assets and 50 percent in U.S. assets. The firm makes equity investments of around C$15 million to C$40 million in companies with EBITDA between C$5 million and C$40 million. The firm prefers to take ownership positions of 20 percent to 80 percent, and invests across a variety of industries. It prefers companies with experienced managers and prospects for growth through internal expansion and add-on acquisitions.

The merchant bank has made a specialty of sorts out of regional casinos. It first invested in the sector in 2000 through Gateway Casinos, a casino operator in western Canada. The firm exited the company in 2007, generating 9.1x its invested capital. Clairvest Group’s portfolio currently includes Casino Marina Del Sol in Concepcion, Chile, and Casino New Brunswick in New Brunswick, Canada.

Previous investors in Clarivest Group’s funds included the Canada Pension Plan Investment Board and Citi Private Equity.