Cortec Group Interviews Placement Agents

Executives at Cortec Group are looking for a placement group to help the firm raise its fifth fund.

The New York-based buyout shop has interviewed a number of groups, but isn’t close yet to making a final decision, David Schnadig, partner, told Buyouts. “As we’ve done on previous fundraisings we’re going to meet with a number of qualified placement agents and hear their views on the market, because we benefit from their input and their perspectives,” Schnadig said. He added that it’s possible the firm will come to market without hiring a placement group.

Cortec Group executives have yet to set a fundraising target or launch date for Fund V. However, Schnadig said that the firm, which buys companies that offer proprietary products or services in manufacturing, distribution and related services, would try to raise more than it did the last time. Cortec Group closed its fourth fund at $410 million in 2006 with backing from such investors as California State Teachers’ Retirement System, Denver Public Schools Retirement System and Mutual of Omaha Insurance. The firm has committed about 65 percent of Fund IV, Schnadig said.

The fund placement group at UBS helped raise Cortec Group’s fourth fund, but the group since then has experienced turnover at the top. In March 2008 co-heads Richard Allsopp and Mark Bourgeois both left. Allsopp went on to form an internal fundraising group at Babcock & Brown (before last month joining the fund placement and secondary advisory group at London-based investment bank Campbell Lutyens & Co. as a partner), while Bourgeois left for Lehman Brothers before joining Credit Suisse in September 2008 as a managing director in its asset management business. Cortec Group’s decision to interview other placement agents has nothing to do with UBS’s performance in soliciting capital for Fund IV or the executive departures, Schnadig said.

Cortec Group had a busy September after going a year without any new platform acquisitions or exits. On Sept. 16 the firm bought 180 Medical Inc., an Oklahoma City-based distributor of catheters. Sixteen days later the firm bought Katena Products Inc., a Danville, N.J.-based company that makes instruments used in eye surgeries.