Dartmouth, RCP Advisors help push Prophet Equity to $345 mln cap

Firm: Prophet Equity

Fund: Prophet Equity II LP

Target: $345 million hard cap (including GP commitment)

Amount Raised: $345 million

Placement Agent: None

Ross Gatlin, Prophet Equity’s CEO and managing partner, told Buyouts that the firm had particular success this time around raising money from endowments, and it also counts banks, pension plans, funds of funds and family offices among its investor base for Prophet Equity II LP. Backers include Danske Private Equity, Industriens Pension, Horsley Bridge Partners, University of Pittsburgh and Unipension

The general partner committed $20 million to the fund, which was raised without benefit of a placement agent. About 70 percent of the money came from re-ups, Gatlin said. The firm ended up turning away about $40 million.

Jon Madorsky, managing principal of RCP Advisors, which committed in the first close, said the fund looked like a lot of Fund IIs in that there weren’t a lot of realizations. “At the same time,” he said, “you could see the strategy starting to work.” He added: “Ross has been doing this a long time, so his tenure and his experience are not reflected in the fund number.”

Southlake, Texas-based Prophet Equity, which raised a debut, 2008 vintage fund of $271 million, invests $5 million to $50 million at a time in asset-heavy companies operating below their potential. Among target industries are aerospace, automotive, consumer products, defense, financial services, healthcare, manufacturing, natural resources and transportation. 

In raising the fund, Gatlin promoted a 15-year track record that includes a stint he did at The Carlyle Group earlier in his career. Over that time, Gatlin said, his team has generated a gross IRR of more than 65 percent and generated more than $2 billion in value on $400 million invested.

Prophet Equity has 12 executives listed on its website and recently added Greg Balliro (not yet listed) as an associate; Gatlin said the firm was looking to add two more junior professionals over the next year or two.

More good news came for Prophet Equity in June when it scored three awards from the Global M&A Network, including in the category of “Private Equity Turnaround of the Year—Middle Markets” for its acquisition and early work with Keywell Metals. The firm bought the company out of bankruptcy at the end of last year.