1. With about $230 million more in the $1.33 billion HGGC Fund II LP compared to the prior fund, will your average check size or number of deals change in the new fund?
Our average equity checks aren’t going to change in Fund II, with typical revenue of about $250 million for our targets. We’re staying in the middle market. We know what we do and we do it well. We don’t want to get really big and then turn around and start competing in a different sand box.
2. Are you going to offer LPs co-investments in Fund II?
Contrary to other private equity firms, we’ll continue to provide fee-free and carry-free co-investments. We’ve already provided significant co-investments on three of the four platform acquisitions we’ve made in Fund II. (Editor’s note: In one deal listed on the website of Copenhagen-based PKA AIP, the LP committed $125 million to HGGC Fund II plus $50 million for a co-investment in Survey Sampling International, a provider of data solutions for consumer and business-to-business research.)
3. In 2013, your firm’s name changed to HGGC from Huntsman Gay Global Capital. Co-founder Jon Huntsman is not in Fund II, and Robert Gay left. Former Citi CFO Gary Crittenden is now chairman, you’re now CEO, and NFL Hall of Famer Steve Young remains as a deal maker. Is that about right?
Greg Benson is still here as managing director and co-founder. Gary Crittenden joined us midway through Fund I. We also have three principals, three vice presidents and a business development officer. They’re all still here from Fund I.
4. You activated Fund II while you were fundraising and you closed four platform investments during the fundraise: AutoAlert, Pearl Holding Group, Serena Software and Survey Sampling International. Did those deals help grab attention from LPs?
Without a doubt. What helps you raise capital is the ability to show repeatability of your strategy. When we kicked off fundraising last year, we did nine majority control deals (including platforms and add-ons). People saw we were doing a deal every 53 days. That cinched it for prospective and existing investors.
5. HGGC executives often maintained a physical presence at stadiums featured in ESPN’s Monday Night Football games with Steve Young as an on-air commentator. Did this help you find new investors or deals?
Middle-market private equity is fundamentally a people business, and the NFL presence resonates with prospective investors, sellers, partners, investment bankers, management teams and others. It’s a fantastic way to source new investments and help our portfolio companies with prospective customers and create ecosystems of relationships that allow us to do things that most private equity firms can’t.
Edited by Steve Gelsi