GTCR Golder Rauner, a 20-plus year-old buyout shop with more than $6 billion under management, has closed the window on its eighth fund, raking in $1.85 million in less than a year.
The firm has already created four portfolio platforms with equity stemming from GTCR Fund VIII LP, and GTCR Managing Principal Ned Jannotta said they “could take up as much as 25% of the fund.”
The firm teamed with separate CEOs in the creation of each shell that will be used to acquire portfolio companies. Fairmont Food Group, headed by Bing Graffunder, will focus on buyouts in the food and beverage sector, while Charles Koppelman has been named CEO of CAK Music Holdings, which will look to acquire music catalogues with proven historical revenue streams. GTCR tabbed Michael Polsky as CEO of Invenergy, which will focus on energy-related leveraged buyouts, and lastly, the Chicago-based buyout shop has chosen Tom Wimsett to head Iron Triangle Payment Systems to dive into the payment processing sector.
“Typically, we partner with CEOs to build a business from a standing start and [look to acquire] mostly startups with outstanding management teams,” said Jannotta. “We then team up to build out the acquisition over time. Our investment could run anywhere from $5 million to $1 billion.”
In a tough fundraising environment, GTCR managed to re-sign some big-name limited partners for Fund VIII, including Harbourvest Partners, Pathway Capital Management and Washington State Investment Board. Other LPs in the GTCR stable include The Duke Endowment, The Ford Foundation, Iowa Public Employees Retirement System, Minnesota State Board of Investments and Pennsylvania State Employees’ Retirement System.
Though the company raised the bulk of the money in March and April, according to Jannotta, “We left the fund open as an accommodation for a few LPs…a formality, really, as we only took in about $30 million [in the final closing].” The firm plans to commit the capital over a four-year period and fully invest the total over a six- or seven-year period.
The buyout shop will look to stick to its knitting regarding portfolio size. According to Jannotta, GTCR usually houses approximately 20 companies in each fund. Fund VIII’s predecessor, aptly titled Fund VII, made its final investment early this year with the $200 million buyout of Morton Grove Pharmaceuticals.
The firm’s seventh fund has completed one exit to date, selling Cambridge Protection Industries LLC to ADT Security Services, a division of Tyco for about $1 billion. Tyco paid five times GTCR’s original investment in the company GTCR and Cambridge CEO James Covert founded in April 2000. Also from Fund VII, GTCR floated DigitalNet Holdings in October, and saw a 23% increase in stock price on opening day. The firm sold five million shares at $17 apiece and as of press time, the shares were selling for $21.50 each.