In Charlesbank Capital Partners first fundraising effort following its split from Harvard University in 2001, the firm was able to corral $585 million in limited partner commitments. That fund, the firms fifth overall and the first that accepted capital from investors other than Harvard, had a relatively easy time surpassing its $500 million target. Now, four years later, Charlesbank is back in the market raising its sixth buyout fund, Charlesbank Equity Fund VI, and anecdotally is having an even easier time this go round.
According to Form D filings submitted to the Securities and Exchange Commission, Charlesbank has already closed on $700.74 million, putting the Boston-based firm near its $900 million cap. One limited partner in the fund told Buyouts that a final close could be imminent, and added that in reference to Charlesbanks self-imposed $900 million ceiling, the firm could have easily raised more than twice that amount.
Charlesbank identified in the filing that it would accept investments of no less than $5 million, although it reserves the right to take in smaller amounts under certain circumstances. Forty accredited investors have committed to the new fund so far, none of whom were made public in the filings. Past investors, though, included World Bank, AIG, Nippon Life, University of Colorado, Fleet Bank, New Brunswick Investment Management Corp. and Wellesley College, in addition to Harvard, which accounted for almost 20% of the previous fund. The source speculated that very few, if any new investors were able to gain access to the latest Charlesbank vehicle.
There are a couple of things in particular that attracted us, the LP said. For one, they have an incredible amount of discipline when it comes to buying businesses. Theyve got a very successful track record of purchasing companies at attractive valuations and theyre not afraid to pass on opportunities when things get overheated Second, the individuals themselves make up one of the highest integrity shops youll come across.
The source would not divulge the firms past track record other than to say it is very consistent and in the upper quartile.Private Equity Intelligence, though, has reported that as of Dec. 31, 2004, Charlesbank’s fifth fund was showing a net IRR of 21.1 percent. With regards to the terms of the fund, the source classified the management fees and carry as industry standard.
Charlesbank In Charge
Even while fundraising, Charlesbank has been able to keep busy on the deal front. In January of this year, the firm took part in the acquisition of Captain Ds, a Nashville-based seafood restaurant chain, and earlier this month, Charlesbank completed its purchase of The GSI Group, a manufacturer and provider of agriculture equipment. Meanwhile, in December 2004, Charlesbank exited its investment in Regency Gas Services, yielding a 3.1x return through the sale.
The investment in Regency follows a similar pattern for Charlesbank, in which the firm partners with a management team and helps to grow the business through acquisition and strategic oversight.
Charlesbank defines itself as a middle market firm that typically invests between $20 million and $75 million per transaction, with enterprise values ranging from $100 million to $500 million.
The firm was formed when the buyout team of Harvard Management Co. spun out from the endowment. Coral Reef Capital, a separate buyout fund launched by Kohlberg & Co. Vet Kim Davis also solely backed by Harvardwas also folded into Charlesbank during the split, and Davis joined managing directors Tim Palmer, Mark Rosen and Michael Eisenson at Charlesbank.