Charterhouse Sells Amerifit, Prepares for Next Fund

Company: Amerifit Brands

Sponsor: Charterhouse Group

Fund: Charterhouse Equity Partners V LP

Scheduled Launch: 2Q 2010

Target: TBD

Placement Agent: TBD

When gearing up for a fundraise, it’s always nice to have a fresh exit on the books.

Such is the case with Charterhouse Group, a New York-based buyout firm that recently sold Amerifit Brands, a Cromwell, Conn.-based nutritional supplement platform, to Martek Biosciences, a listed, Maryland-based biosciences company. The price tag was $200 million. Amerifit makes Culturelle, a dietary supplement, and Azo, a medicine that helps to relieve and prevent urinary tract infections.

The exit returns money to Charterhouse Equity Partners IV LP, a $447 million pool raised in 2004. It marks the firm’s third exit from that fund, out of 11 total platforms. The fund is around 90 percent deployed, leaving the firm ready to enter the fundraising market.

Charterhouse Group plans to launch fundraising in the second quarter, according to a source familiar with the situation. No target has been set yet, since the firm first wants to get feedback from investors on an appropriate fund size. Charterhouse Equity Partners III LP, a 1998 vintage vehicle, had $1 billion in commitments. The firm attributes the drop in size from Fund III to Fund IV in part to the fact that its placement team left Merrill Lynch for Lazard in 2003, just before Charterhouse Group went to market. Still, the firm retained many of its large institutional investors, including AlpInvest, J.P. Morgan and Goldman Sachs. Charterhouse Group declined to comment on fundraising or which placement agent it may choose for its new fund.

The firm’s successful exit of Amerifit should help Charterhouse Group in its marketing. The firm purchased Amerifit in 2005 for $80 million, using a significant amount of equity, Partner David Hoffman said. Since then, the firm has invested additional capital for two add-on acquisitions. In 2005, the firm purchased the women’s health products division of Polymedica Corp. for $45 million, and in 2006, the firm purchased Culturelle from ConAgra Foods for less than $20 million, according to reports at the time. At that point, the company took on additional debt and brought in Bear Stearns Merchant Banking, now known as Irving Place Capital, as a co-investor.

Hoffman would not comment on the exact return generated from the sale of Amerifit, except to say, “It’s a very successful deal for us.” Under Charterhouse Group’s ownership, the company more than doubled its revenue even while de-emphasizing or discontinuing non-key brands over time, Hoffman added.

Charterhouse Group hired Deutsche Bank and U.K. advisory shop Nicholas Hall & Company to sell Amerifit last fall after receiving a handful of unsolicited approaches for the company. The firm ran a “limited process,” achieving a deal multiple of “above the market average,” Hoffman said. Amerifit’s new parent, Martek, which develops nutritional products, some of which are used in infant formula, trades at a price-to-earnings ratio of 16.94.