Catterton Goes Small With $300M Consumer-Retail Fund

Firm: Catterton Partners

Fund: Catterton Partners small-cap fund

Target: $300 million

LBO shop Catterton Partners plans to move down-market with a fund aimed at small buyouts and growth plays, people familiar with the situation told Buyouts.

The consumer and retail-focused firm is seeking to raise a new $300 million vehicle to take advantage of smaller opportunities that don’t fit the mid-market investment strategy of its main fund. Equity checks from the Connecticut-based firm’s larger fund range from $30 million to $100 million. With the new fund, the firm would spend $10 million to $30 million in equity to buy control stakes in fast-growing lower-middle-market companies.

The new fund opened to commitments in the third quarter of this year, according to one source. A majority of the money is expected to come from Catterton Partners’s existing base of limited partners. Likewise, the fund would be run by the firm’s existing personnel, with managing partners Michael Chu and Scott Dahnke serving on its investment committee.

Catterton Partners’s latest vehicle, Catterton Partners VI LP, closed in 2006 with $1 billion in commitments. Investments from that fund include the buyouts of restaurateurs Outback Steakhouse and Cheddar’s and confectioner Brach’s.

Most recently, the firm announced an agreement to buy specialty home goods retailer Restoration Hardware for $267 million, only to see Sears Holdings top the bid by a nickel per share. Restoration Hardware has agreed to allow the Eddie Lampert-backed retailer to conduct due diligence.—E.G.

Clarification: An earlier version of this story reported that equity checks from Catterton Partners’s larger, main fund ranged between $25 million and $85 million.