Heartland Set to Close Under Target –

Despite published reports out last week, Heartland Industrial Partners, founded by a group including David Stockman in 1999, has not yet held a final close on its debut fund. Contrary to what was reported in other publications, Heartland is planning a final close before the end of the year at approximately $1.3 billion – $700 million under its original target, said a source familiar with the situation.

The firm came on like gangbusters in its first year of fund raising, gathering about $1 billion in a few short months (Buyouts May 29, 2000, p. 1). The first close consisted of more than 40 institutional and private investors including State of Michigan, Ontario Teachers’ Pension Plan Board, Metropolitan Life Insurance Co., Chrysler Corp. and a number of wealthy individuals and industrial businesspeople.

While partners at Heartland declined to comment, it looks as if the firm began to concentrate more on deals than finishing out fund raising after its monstrous first close. In fact, in a May 2000 letter to LPs informing them of the first close, Heartland mentioned dedicating efforts to the investment process – focusing on consolidation opportunities in manufacturing, including the automotive, capital goods, chemicals and machinery sectors.

Indeed, Heartland has been an active deal-maker over the past year when many other firms are sitting on the sidelines. Should Collins & Aikman’s $1.28 billion acquisition of Textron Automotive close before the end of the year as intended, Heartland will have sponsored three of the less than 10 mega buyout deals in 2001. The other two $1 billion-plus deals are Collins & Aikman and Springs Industries.

As for fund raising, Heartland did receive positive news last week. The Canadian Pension Plan Investment Board signed on to invest or co-invest up to $150 million with Heartland over the next six years.

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