After holding a first close on $135 million for the first buyout fund it has marketed to institutional investors, Chartwell Investments last month increased the target for its fund to $300 million from $200 million.
The firm is one of several groups-such as Compass Partners International L.L.C.-raising first or second-time efforts that have found that hiring a placement agent midway through the process has aided its fund-raising efforts. Compass began raising capital in 1997 for Compass Partners European Equity Fund, L.P. but did not generate much interest from U.S. investors until it hired Farrell Marsh & Co. last year (BUYOUTS Aug. 31, 1998, p. 6).
In Chartwell’s case, the group originally set a $200 million target when it launched Chartwell Investments II, L.P. about six months ago. Although it launched the effort last year, the firm had floated the idea about raising a fund to interested parties as far back as 1997 (BUYOUTS Oct. 27, 1997, p. 6).
Chartwell last month hired placement agent Atlantic-Pacific Ltd. and now has been meeting with more pensions and endowments, said Todd Berman, Chartwell’s president.
Mr. Berman said the firm originally only wanted to raise capital from investors, mostly families and financial institutions, that were familiar with the firm. The group changed its mind when Atlantic-Pacific approached it about helping to raise a larger fund with a broader base of limited partners. “We thought it would lay the groundwork for a bigger and better fund over time,” Mr. Berman said.
The New York-based group invests in service companies and distributors in basic industries. Chartwell, institutional investors and management last committed about $60 million in equity to acquire the crane division of Harnischfeger Industries, renaming the unit Morris Material Handlings (BUYOUTS Feb. 23, 1998, p. 14).
Another High-Powered Advisory Board
Chartwell is known for having an advisory board that includes political figures such as former Clinton strategist George Stephanopoulos and former Minnesota Congressman Vin Weber.
Limiteds that participated in the first closing, but committed capital before Chartwell hired the placement agent, include a family that has backed the firm since its formation in 1993 and which committed $50 million, but which Mr. Berman declined to identify. CIBC Oppenheimer Corp., CMS Cos., Credit Agricole Indosuez, Donaldson, Lufkin & Jenrette’s fund-of-funds, First Union Bank, Merrill Lynch & Co.’s KECALP fund and The Travelers Insurance Group also signed on for the closing.
The next close likely will include some pensions and endowments, Mr. Berman said.