Castanea Partners, which won big with Urban Decay, takes in $368 mln for Fund IV: UPDATED

A prospective investor who wasn’t sure if a target had been set on Castanea Partners Fund IV thought the fund could reach $750 million. (UPDATE: On Jan. 14 Castanea Partners filed a Form with the Securities and Exchange Commission reporting it had raised $368 million for Fund IV.)

Based in Newton, Mass., Castanea Partners was founded in 2001 by Managing Partners Brian Knez and Robert Smith, former co-CEOs of Harcourt General and The Neiman Marcus Group. Brothers-in-law Knez and Smith committed $75 million of their own money to the first fund, and went on to raise a second fund of $207 million, vintage 2004, that included a mix of their own money and institutional backing. The firm’s third fund, Castanea Partners Fund III, raised in 2007, has $500 million in committed capital, according to the firm’s website. Backers have included Massachusetts Institute of Technology, Princeton University and Yale University. An executive at Castanea Partners declined to comment for this story.

Castanea Partners typically invests $20 million to $75 million at a time in growth equity financings and acquisitions of consumer companies, marketing services companies and providers of business information. With a team of some 25 professionals—the firm’s website lists three partners and three operating partners, along with Knez and Smith—the firm prides itself on bringing a combination of operating, private equity, consulting and investment banking experience to bear on its portfolio companies.

The firm’s website lists six current portfolio companies, including hair salon chain drybar, an investment that dates to January 2012; training equipment supplier Fitness Anywhere LLC (March 2011), luxury footwear designer Donald J Pliner (February 2011) and nutritional supplement marketer Health Resources (February 2010).

In November 2012 Castanea Partners said it had signed an agreement to sell make-up company Urban Decay to French beauty company L’Oréal. The company’s profits rose six-fold during the firm’s close to four-year holding period, and the deal generated a return multiple of about 8x, according to a write-up on the Castanea Partners website; The New York Daily News estimated the purchase price at $300 million to $400 million.

(UPDATE: This article was updated to reflect the firm’s filing of a Form D for Fund IV on Jan. 14.)