Benford Capital Partners closed a second lower mid-market buyout offering at its $200 million hard-cap despite signs of a tougher fundraising environment.
The Chicago private equity firm also accomplished this in short order. Launched earlier this year, Benford Capital Partners II exceeded its $175 million target inside of four months, founder and managing director Edward Benford told Buyouts.
PE fundraising is slowing as a result of a crowded marketplace, over-allocated LPs and other factors. Some 164 vehicles secured almost $132 billion in the first quarter, down 24 percent from a year earlier, Buyouts’ data showed, reversing a trend of major post-pandemic growth.
Benford’s rapid pace against this backdrop owes to “a terrific group of investors in Fund I,” all of whom “re-upped and upsized,” Benford said. New and existing LPs committing to Fund II included university endowments, family offices, pension plans, fund of funds and high-net-worth individuals.
Benford also credits “our sticking with a consistent and differentiated strategy dating back to when we were an independent sponsor.”
Established in 2004, Benford is an operationally focused buyer of family or founder-owned businesses with EBITDA of $1 million to $10 million and revenue of $5 million to $100 million. Opportunities are targeted in four core sectors: industrial technology, consumer and food, B2B e-commerce, and agricultural products and services.
Prior to Fund I, closed in 2020 at $130 million, Benford was a deal-by-deal investor. It raised 15 vehicles and deployed about $56 million, according to ADV filings, backing 24 pre-fund investments or two-thirds of the total since inception. This long track record helped to prove out the strategy, Benford said.
Building and scaling
Since Fund I, Benford said, “we’ve been building and scaling our firm,” increasing LP confidence. It today has 13 investment and operating professionals. Sharing leadership of the team is managing director Benjamin Riefe.
Before founding the firm, Benford was for six years a principal with Prospect Partners, where he served on the board of seven portfolio companies. Earlier, he was member of Lazard’s investment banking group, working on M&A and corporate finance transactions.
Riefe, who came onboard in 2007, was formerly an executive with Willis Stein & Partners-backed Roundy’s Supermarkets. Earlier, he was an associate with Willis Stein and part of Deutsche Bank’s financial sponsor coverage and leveraged finance groups.
Benford’s preferred opportunities, sourced across North America, involve small-market niche leaders with defensible positions and the potential to grow organically or through acquisition. To support value creation, it tends to have above-average hold periods of five to seven years.
The firm’s debut deal, Space Electronics, a test and measurement instruments and services provider, was acquired in 2004. Benford and Coppermine Capital sold the business in 2019 to L Squared Capital Partners.
More recent deals include last year’s recapitalization of Farmers Hen House, an organic, free-range and pasture-raised eggs supplier. Among its other 2021 investments, Benford formed Argus Monitoring Solutions, a seismic and environmental monitoring services platform, and recapitalized Nutrition Service Company, a livestock nutrition specialist.
Other senior team members are principal Brian Behm, who joined Benford last year from Tilia Holdings, and principal Brendan Green, who joined in 2016 from Antares Capital.