Imperial Capital Targets C$350M For Fund IV

Imperial Capital has scaled back on the target for its fourth buyout fund after heeding advice from some of its investors. The Toronto-based firm is targeting C$300 million to C$350 million ($303 million to $353.5 million) for the fund, Imperial Capital Acquisition Fund IV LP, a source familiar with the fundraising effort told Buyouts.

Imperial Capital hit the market with a C$500 million target. But the firm racheted back after a few key investors told the firm that despite liking the team, strategy, positioning, and returns, the target was too big a leap from the C$130 million third fund, closed in 2000, according to our source.

The firm began raising the fund in January and closed on C$50 million from wealthy individual investors at the end of February. Executives expect to hold a second close on another C$100 million from institutional investors at the end of July, our source said.

Imperial Capital typically gives itself a year to raise funds, which would put the close date near the end of the year. But the firm may leave the door open through the first quarter of 2009 for institutional investors. The fund has lined up commitments from three Canadian limited partners, one United States institution and one European institution, our source said.

The fund does not yet have a placement agent but its managers may hire one on a limited basis to target certain types of investors or investors in certain regions. The firm did not employ placement agents for its previous funds. Imperial Capital closed its first fund at C$2.7 million in 1991; its second fund at C$30 million in 1995; and its third fund at C$130 million in 2000.

Imperial Capital cuts equity checks of C$20 million to C$100 million for a majority stake in companies that are often family owned and generate revenues between C$50 million and C$300 million. The firm typically funds its deals with 50 percent equity.

The firm specializes in buying Canadian or U.S. companies and expanding their operations throughout North America via acquisitions. Imperial Capital’s portfolio includes Kenra, an Indianapolis-based maker of ethnic hair care products that it bought in February 2007; and Lise Watier Cosmetiques Inc., a Montreal-based cosmetics maker bought in March 2007.—B.V.