H.I.G. Capital is gearing up to hit the road within the next two weeks with H.I.G Capital Partners III, its third buyout fund. Founded in 1993, the Miami-based firm is looking to raise between $350 million and $400 million.
“Our funds have always focused on the lower middle-market segment,” said Tony Tamar, managing partner and co-founder of H.I.G. “We want to keep the fund size reasonable, it will just be a little bigger, but we don’t anticipate a mega-fund.”
H.I.G. Capital’s previous buyout fund topped out at $250 million. The new fund will follow in its predecessor’s footsteps and focus on transactions in the $200 million range.
“We think the lower middle-market is attractive in terms of the ability to finance it. They are simpler transactions, with no large syndicate of banks. There are also more companies to invest in, in that segment,” explained Tamar.
H.I.G Capital Partners III is expecting to invest $5 million to $20 million per transaction.
Roughly 70 limited partners came in on H.I.G Capital Partners II and Tamar expects existing LPs make up a large portion of H.I.G. Capital Partners III. “There will only be a handful of new names added to our LP lists,” Tamer said.
Some of H.I.G Capital’s previous LPs include Yale University, M.I.T., Wilshire Associates, Goldman Sachs, G.E., and First Union Bank.
Tamar is confident that H.I.G. Capital Partners III will be able to snag the existing LPs because its investment interests aren’t changing that much. “Everything will be the same. We’re diversified in a lot in manufacturing, but never focused on a specific industry,” he said, adding that the slight difference is that this fund could wind up investing in distressed companies, given the market environment.
The fund is expected to close late in the second quarter and be fully invested in three to four years.
In addition to working in the buyout sector, H.I.G. Capital also has a separate $255 million venture fund.
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