Exits: Lincolnshire Exits Two, Approaches Fund Close –

Lincolnshire Management is on a roll.

This month the New York-based buyout firm sold two portfolio companies Patterson Gear & Machine, a general-purpose and high-precision gears and shafts manufacturer, and Imperial Products, a door threshold manufacturer. Additionally, the firm opened an office in Chicago to focus on deal origination in the Midwest and is looking to hold a close on its second fund this quarter.

With the sale of these two portfolio companies, New York-based Lincolnshire returned 275% of the capital invested in Patterson and Imperial more than two years ago. The firm purchased the companies along with four others all in separate industries – under the name Jayhawk Growth Co. in November 1997.

Lincolnshire assisted Rockford, Il.-based Patterson in introducing new product lines, said T.J. Maloney, the firm’s president. As for Imperial, located in Richmond, In., Lincolnshire increased the company’s distribution and marketing, especially on the West Coast, he said.

Lincolnshire has been realizing investments from Lincolnshire Equity Fund LP at a torrid pace.

Through Fund I, Lincolnshire purchased 15 portfolio companies and completed 10 add-on acquisitions in four years. In the last 15 months, the firm has sold nine of those companies and has a contract to sell a tenth. Once those 10 have been sold, Lincolnshire will have generated a net internal rate of return of 45% on its investments from Fund I.

Earlier this year, Lincolnshire opened an office in Chicago that is headed by Jim McNair. Maloney said one of the keys to getting the kind of non-auction investment opportunities that Lincolnshire thrives on, is to have a national presence in the major regional markets. The firm now has offices in New York, San Francisco, Washington, D.C. and Chicago the Washington, D.C. office was opened last year.

Since the additions of the new offices, Maloney said the deal flow “has never been better,” with 13 transactions currently under letter of intent.

Separately, the firm recently hired Drew Shea, a former Merrill Lynch executive, as a vice president in the New York office. Shea worked with Lincolnshire last year when the firm sold Polaris Pool Systems to Paribas Principal Partners late last year.

Lincolnshire Equity Fund II had a first close on $200 million last October and has another $100 million soft-circled, Maloney said. The firm anticipates a second close in May and a final close on the targeted $400 million this summer.