Evergreen Pacific Makes Quick Work Of Fund II

Firm: Evergreen Pacific Partners

Fund: Evergreen Pacific Partners II LP

Target: $400 million

Amount Raised: $425 million

Legal Adviser: Kirkland & Ellis

Evergreen Pacific Partners has made a swift journey of raising its second fund. On August 1, the firm closed on $425 million for its sophomore vehicle, surpassing a target of $400 million and reaching its hard cap a scant few months after the fund’s launch in April.

The firm invests in mid-sized companies in the manufacturing, distribution, packing, media (radio and cable) and consumer products industries in the northwest United States and western Canada. It seeks to acquire companies generating revenue of between $50 million and $350 million and to work with management teams as a control investor to double cash flow in under five years. The Seattle-based Evergreen Pacific’s narrow focus on location, size and industry to generate a gross IRR of 32 percent and a net IRR of 18 percent on its debut fund, according to information on the Web site of one of its backers. The firm looks for traditional buyouts, management-led buyouts and growth equity investments. The fund has a minimum investment of $5 million.

Evergreen Pacific intends to use the proceeds of Fund II to make eight platform investments in roughly three-and-a-half years, said managing partner T.J. McGill. Although it has yet to pull the trigger in Canada, the team has spent a lot of time in British Columbia and Alberta looking at potential targets. The shop could make a single investment there to finish off Fund I.

Commitments for the second fund came from Credit Suisse, Guardian Life Insurance Company of America, the reupping Pennsylvania Public School Employees’ Retirement System (up to $100 million), the School Employees Retirement System of Ohio (up to $25 million), and Washington State Investment Board (up to $50 million). The backers are mostly return investors. Evergreen Pacific did not use a placement agent for this fund, although Mallory Capital Group served as the placement agent for the previous vehicle. Their legal adviser is Kirkland & Ellis.

The company’s previous fund, Evergreen Pacific Partners LP, a $275 million fund established in May 2003 and closed in March 2005, completed its sixth transaction in March of this year, facilitating the merger of two demolition contractors, Snoqualmie, Wash.-based Nuprecon, and Brea, Calif.-based CST Environmental. The combined Nuprecon/CST has more than 1,000 employees. The firm plans to make one more platform investment with Fund I and then some follow-ons, at which point the team will start investing from Fund II, said McGill.

The debut fund’s backers include the Duke Endowment, Employee Retirement Income Plan Trust of the Minnesota Mining and Manufacturing Co., Mass Mutual, the Oregon Investment Counsel, the Pennsylvania Public School Employees’ Retirement System (up to $50 million), the Southern Company System Master Retirement Trust, and West AM Private Equity Group. Twenty-five Pacific Northwest-based CEOs also pledged to the fund.

Evergreen Pacific’s three managing partners—Timothy Bernardez, T.J. McGill and Michael Nibarger—founded the firm in January 2003, having worked together previously at Northwest Capital Appreciation, a Seattle-based private equity firm. Timothy Brillon, CFO, joined Evergreen in July 2004. Ed Wheatley, a recent addition, came on board August 1 to serve as a senior vice president working on origination, transaction execution and portfolio management. Wheatley previously served as a managing director with Credit Suisse in New York. The firm expects to continue to add staff over the next couple of years, said McGill.