Industrial Opportunity Partners is maintaining its slow and steady growth as it works to raise its next flagship pool.
The Illinois firm, formed in 2005, is targeting $600 million for its fourth fund, sources told Buyouts. That would be a modest increase from the third fund, which closed on $450 million in 2017.
IOP hits the red-hot fundraising market that is crowding LPs’ commitment calendars, as established firms come back earlier than expected, raise capital around new strategies and new firms look for backers.
The firm targets investments in niche industrial companies. It’s not clear if Fund IV has a cap; two sources said the pool could raise more than the target. Park Hill Group is working as placement agent on the fundraising.
IOP generally charges a 2 percent management fee, and a 20 percent carried interest rate after an 8 percent preferred return, the firm’s Form ADV said.
While many GPs are driven to come back to market as soon as possible, to make sure they don’t miss the fundraising window that is right now wide open, IOP traditionally has not rushed to raise its next fund.
The firm is known to take longer than other shops in bringing new funds to market. It closed its debut pool in 2007 on $185 million. Fund II closed on $275 million in 2012, while the third fund closed in 2017 on $450 million.
“They come back to market every five or six years,” said one of the sources, an LP who has heard the fund pitch. “That goes against the mode today of every two to two-and-a-half years.”
Fund IV will proceed without one of IOP’s original founders, Adam Gottlieb, who formed the firm along with fellow TMB Industries alumnus Ken Tallering, and ex-Wynnchurch Capital executive Robert Vedra. Gottlieb moved into a senior advisory role several years ago, according to a source and IOP’s website.
The principal owners of IOP’s management company are listed as Tallering and Vedra, according to the firm’s most recent Form ADV.
Fund I was producing a 25 percent internal rate of return and a 3.1x multiple as of Dec. 31, 2020, according to performance data from California Public Employees’ Retirement System. Fund II is said to be a strong performer, according to both sources, but specific performance data could not be found.
IOP targets investments in mid-market manufacturing and distribution companies, with a focus on undermanaged businesses, according to the Form ADV.
Earlier this month, the firm, alongside company management, invested in Brewster Home Fashions and Fine Decor Wallcoverings. Brewster designs, supplies and makes DYI peel-and-stick wallpaper, peel-and-stick flooring, traditional wallpaper, home decor, decals and other products for the residential market in the US and globally.
Update: This article was updated with information about the placement agent on the fundraising.