Franchise investor Roark Capital enters last lap with $5bn Fund VI

Roark Capital, owner of high-profile fast-food restaurant brands like Arby’s and Dunkin’, is nearing the final close of its sixth flagship buyout fund.

The Atlanta private equity firm recently filed Form D fundraising documents showing it had secured more than $4.6 billion for Roark Capital Partners VI, putting it in sight of a $5 billion target. The placement agent is Lazard.

Some 155 LPs committed to three Fund VI pools. Disclosed investors include New York State Common Retirement Fund, Oregon State Treasury and Tennessee Consolidated Retirement System.

Roark exceeded the goal set for its prior flagship offering. Fund V closed in 2018 at $5 billion, compared to a $4 billion target, and raised $1.5 billion more through a sidecar vehicle targeting $1 billion.

Founded in 2001 by managing partner Neal Aronson, the firm invests in consumer and business service companies, with a primary focus on franchise and multi-unit organizations. Dealflow is sourced in sectors like food and restaurants, specialty retail and health, wellness and beauty.

The strategy derives in part from the pre-Roark career of Aronson, co-founder and ex-CFO of US Franchise Systems, a global hotel franchising company. Before USFS, he was an executive with Odyssey Partners and the forerunner to Oak Hill Capital.

Since inception, Roark has acquired 98 franchise and multi‐unit businesses, according to its website. The majority owned Inspire Brands holds the familiar restaurant chains, including Arby’s (bought in 2011); Jimmy John’s (2016); Buffalo Wild Wings and Rusty Taco (2017); and Sonic Drive-In (2018).

Inspire Brands in 2020 made its largest bet yet, acquiring Dunkin’ Brands, the parent of coffee and donut chain Dunkin’ and ice cream chain Baskin-Robbins, for $11.3 billion, including debt. The sellers were Bain Capital, Carlyle and Thomas H Lee Partners.

Roark has since continued to add to the portfolio, last year buying Nothing Bundt Cakes, a franchisor of gourmet bakeries, and Mathnasium, a franchisor of math learning centers. It also took public Pet Valu, a pet food and supplies retailer acquired in 2009.

Fund VI will build on this activity by making 10 to 15 investments in mostly North American consumer and business service sectors, a 2021 report by Los Angeles City Employees’ Retirement System said. It will write checks of $50 million to $1 billion in deals with enterprise values of up to $2 billion.

Aronson oversees a team of about 60 investment professionals. Senior team members include president Paul Ginsberg and CIO Erik Morris.

Roark Capital Partners V was earning a 1.46x multiple and a 26.6 percent net IRR as of September 2021, according to Oregon Public Employees’ Retirement Fund.

Roark declined to provide a comment on this story.