Buyout competition in the Western U.S. has increased-as a new firm with middle-market intentions recently closed its first fund and is now on the prowl for deals. The firm’s name is Evergreen Pacific Partners LP, and its geographically-focused inaugural fund goes by the same moniker.
Seattle, Wash.-based Evergreen raised a total of $275 million for its debut fund and counts West AM, The Duke Endowment and Mass Mutual among its fund’s institutional limited partners. Also, the Public School Employee Retirement System of Pennsylvania (PSERS) hopped aboard after approving an investment in the new vehicle of up to $50 million, according to the pension’s April 2004 meeting minutes.
Twenty-five Pacific Northwest-based CEOs also made commitments to the new fund, according to Thomas McGill, a partner at Evergreen. The remainder of the fund’s investors includes a mix of foundations, endowments, corporate pension funds, public pension funds, fund of funds and insurance companies, he said. According to the firm’s Form D filing, the fund is comprised of 52 accredited investors and carried a minimum investment limit of $1 million, which was subject to a waiver by the issuers, McGill said. Mallory Capital Group LLC was tapped to serve as placement agent for the fund.
Evergreen was founded in mid-2003 and fundraising began shortly thereafter in the fall, McGill told Buyouts while in Idaho eyeing potential investments. The bulk of the fundraising was completed late last year and the first few months of 2005 were spent wrapping up commitments, he said. As of presstime, the firm has no investments under its belt.
The dry powder will be put to work in four industries: manufacturing and distribution; packaging; consumer products; and media-which for Evergreen’s purposes connotes radio and cable investments. Evergreen’s modus operandi will be to sponsor traditional buyouts, management led buyouts and growth equity investments in private companies in 13 states in the Western U.S. and two of Canada’s western provinces, Alberta and British Columbia.
“We are very hands-on from a portfolio management standpoint, and we like the idea of being within a three-hour direct flight to each of our portfolio companies,” McGill said. “The entire West, relative to its amount of GDP, is not as competitive as the Midwest and the East.”
But the fact that there is still sitting room available for a new middle-market buyout firm to open up shop on the left coast does not mean that there are fewer investment opportunities, according to McGill. The U.S. West is fertile economic ground, accounting for $2.35 trillion, or nearly 24%, of total domestic product for the country. Per deal, the firm will invest a minimum of $10 million of equity in companies that generate between $25 million and $250 million in annual revenues.
McGill said that Evergreen’s network runs deep throughout the West and is strongest in the Pacific Northwest, where the firm’s three co-founders have spent much of their professional lives. He went on to say that there are more than 6,000 companies in the firm’s target industries located in the Western United States and the bordering Canadian provinces.
Evergreen was founded by the firm’s three partners Timothy Bernardez, Michael Nibarger, and McGill. The trio met while they were principals at Northwest Capital Appreciation, a 12-year-old Seattle-based private equity firm that makes investments in the smaller-middle-market. Tim Brillon, Evergreen’s CFO, joined the firm last July, leaving his post as director of finance at Bellevue, Wash.-based SeaPoint Ventures, a communications-focused venture capital firm.