Heartland Holds Mammoth First Close –

Limited partners aren’t completely tech-obsessed after all, and manufacturing businesses better watch out.

Over the course of about four months, Heartland Industrial Partners has managed to round up approximately $1 billion for its debut fund, which will target industrial manufacturing companies in the U.S. The fund holds a target of $2 billion.

The fund has achieved the second largest first close for a new fund in the history of private equity investment partnerships, according to a letter obtained by BUYOUTS that Heartland general partners sent to their limited partners. Silver Lake Partners, focusing on technology, held a first close on $1.5 billion last year, scoring the largest ever first close for a debut fund.

More than 40 financial institutions and private investors participated in the first close for Heartland, the letter said, including the State of Michigan, Ontario Teachers’ Pension Plan Board, Metropolitan Life Insurance Co., Chrysler Corp. and a number of industrial businessmen.

Partners at the firm declined to comment on the close.

A Call to Invest

Heartland now will dedicate its efforts to the investment process, the letter said. The new firm will focus on consolidation opportunities in manufacturing, including the automotive, capital goods, chemicals and machinery sectors.

David Stockman, formerly a managing director at The Blackstone Group, left his post there last September to launch the Heartland fund. In 1997, he led the recapitalization of American Axle and Manufacturing Holding Inc, toward which Blackstone committed $113 million in equity.

According to the letter, Heartland has “several multi-billion dollar acquisition targets” in its active deal pipeline and has progressed “well beyond initial discussions” with three companies in the metal forming, automotive components and home textile industries.

Staff Expands In Step With Fund

Heartland has grown to seven partners over the last few months and will add two more who have already been hired within the coming weeks.

Each Heartland partner has a unique title that describes his or her role in the firm. Stockman is the “buyout partner,” Tim Leuliette is the “industrial partner,” Dan Tredwell is the “financial partner,” Perry Lewis is the “investment partner,” Gary Banks is the “information technology partner,” Cindy Hess is the “operations/supply chain partner” and Gerry McConnell is the “finance execution partner.”

The firm anticipates subsequent closes on the fund through the summer and fall that will take it to its $2 billion target, the letter said.