Charlesbank closes Fund VIII at $1.75 bln, may write bigger checks: UPDATED

Firm: Charlesbank Capital Partners

Fund: Charlesbank Equity Fund VIII

Target: $1.5 billion

Amount Raised: $1.75 billion

Placement Agent: None

Law firm: Goodwin Procter

In a sign of keen interest from limited partners, Charlesbank Capital surpassed by $250 million its $1.5 billion fundraising target and hit its hard cap for Fund VIII. The fund, which was significantly oversubscribed, has not been tapped yet for any deals, according to a source.  The firm may begin calling capital from its Fund VIII LPs in late 2014.

Its predecessor, Charlesbank Equity Fund VII, raised $1.5 billion in commitments in 2009, ahead of its $1.25 billion target.

The larger dollar size for Fund VIII could translate to a slightly larger average equity check in future deals, according to a person familiar with the firm. Charlesbank Capital said Fund VIII will seek out 12 to 15 investments over the next several years with about $50 million to $150 million of equity capital per investment. In Fund VII, Charlesbank said its equity checks would range from $50 million to $100 million.

”With most investors returning from the firm’s previous funds, Charlesbank also welcomed a small number of new investors, including several leading endowments and foundations, family offices and pension funds,” the firm said in a prepared statement.

A generalist buyout shop, Charlesbank Capital’s portfolio reflects several sectors: industrial products and services, energy, logistics, building products, consumer products and services, telecommunications, healthcare and financial services. Executives at Charlesbank Capital did not respond to an interview request from Buyouts.

Massachusetts Pension Reserves Investment Management Board committed $200 million to Fund VIII in June. Charlesbank Capital’s LP roster also includes the Regents of the University of California, Harvard Management Company and the University of Colorado Foundation , according to Thomson One.

Buyouts initially reported in January that Charlesbank Capital Partners was preparing to come back to the fundraising market in mid-2014.

Fund VII generated an IRR of 15.6 percent as of Dec. 31, 2013, for the Nevada Public Employees’ Retirement System.

In December, Charlesbank Capital exited precision manufacturer Tecomet after growing the company’s EBITDA by 3x prior to selling it to Genstar Capital. Charlesbank Capital purchased Tecomet in 2008 from Cardinal Health.

Other notable portfolio companies include OSP Group, an online marketplace primarily for plus-size customers, where EBITDA has gone up more than 40 percent in less than two years, according to a source. Charlesbank Capital has returned 2x its capital to date on that deal.

Also, Charlesbank Capital Partners has more than doubled the size of portfolio company United Road Service to nearly $60 million in EBITDA through a combination of organic growth and one acquisition after investing in the company in 2012.

Charlesbank Capital spun out of Harvard Management Company in 1998. It has invested $2.8 billion in 45 mid-market companies in the past 16 years. Co-Chairmen Kim Davis and Michael Eisenson lead its team of 45 people, which includes managing directors Sam Bartlett, Jon Biotti, Ryan Carroll, Michael Choe, Andrew Janower, Josh Klevens and Brandon White

(Correction/Update: This story has been updated to remove the name of a limited partner that was incorrectly included in a list of past investors in Charlesbank Capital funds. Earlier, thie story was updated to include additional information about Charlesbank Equity Fund VIII being oversubscribed and that the fund has yet to make an investment; also information about its United Road Service and OSP Group deals.)