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,” says 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 last 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,” Tamar explains. “They are simpler transactions, with no large syndicate of banks. There are also more companies to invest in in that segment.”
H.I.G Capital Partners III expects 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 to make up a large portion of Fund III. “There will only be a handful of new names added to our LP lists,” Tamer says.
Some of H.I.G Capital’s previous LPs include Yale University, the Massachusetts Institute of Technology, Wilshire Associates, Goldman Sachs, General Electric 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 expected to deviate much from its earlier strategy. “Everything will be the same. We’re diversified in a lot in manufacturing, but never focused on a specific industry,” he says.
The only difference is that its latest fund could wind up investing in distressed companies, given the market environment, Tamar adds.
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.
Danielle Fugazy can be contacted at:Danielle.Fugazy@tfn.com