Littlejohn Returns To Well For $200M ‘Top-Off’ Fund

Firm: Littlejohn & Co.

Fund: Littlejohn Fund III

Target amount: $200 million

Original fund size: $650 million

The economy may be going strong, but turnaround shop Littlejohn & Co. has apparently managed to find opportunities aplenty. The Greenwich, Conn.-based firm has gone back to its limited partners to raise a $200 million “top-off” vehicle to complement its latest fund, Littlejohn Fund III, Buyouts has learned.

Limited partners agreed to amend the partnership agreement to allow for the expansion in size of Littlejohn Fund III, which closed last year at $650 million. They also agreed to give Littlejohn the flexibility to make both control and non-control investments. Previously the fund was only mandated to make control investments. Executives at the firm declined to comment.

Raising a “top-off” fund lets Littlejohn avoid the unpleasantries of heading out to market to raise another formal partnership, while limited partners get the opportunity to commit more money to a favorite group without having to worry about competing for slots with new investors.

Backers of Littlejohn funds have included BancBoston, the California Public Employees’ Retirement System (CalPERS), Duke Management Co., Howard Hughes Medical Institute, Johnson & Johnson, Kansas Public Employees Retirement System, Oregon State Treasury, and Teachers Insurance and Annuity Association of America, according to Thomson Financial, publisher of Buyouts. At the time it closed Fund III, the firm declined to name specific limited partners, but told Buyouts that 80% of the money came from institutional investors, including state and corporate pension funds, endowments, insurance companies and funds-of-funds.

Littlejohn has been investing at a steady clip since closing its fund last year. In September, the firm announced that it had acquired Stolle Machinery Co., a Centennial, Colo.-based maker of equipment for manufacturers of beverage cans and food cans. The seller was American Industrial Partners (see Buyouts, Sep. 20, 2006). In August the firm announced that it had committed capital to purchase a minority stake in Bulk Express, Inc., a company that specializes in temperature-controlled shipping.

Littlejohn’s previous fund, Littlejohn Fund II, is a $70 million, vintage 1999 fund that had generated a 0.4% net IRR and a 1.0x investment multiple as of June 30 for CalPERS, according to the pension fund’s Web site. (CalPERS cautions that IRRs by themselves are not the best indicators of how a fund is performing or how it will perform in the future and that private equity funds are long-term investments.)

Founded in 1996, Littlejohn invests in industries such as automotive and transportation parts and equipment, chemicals, consumer products, food processing, health care, industrial equipment, plastics, and textiles. The firm usually invests between $50 million and $100 million in equity in mid-sized companies generating revenues of between $150 million and $800 million. The firm specializes in turnaround transactions, buying on companies that require structural re-tooling or strategic redirection.—M.S.