Milestone Nears $200M On Its Third Fund

In the coming weeks, Milestone Partners intends to hold a third close on its third buyout fund. In its first two closings, Milestone Partners III LP garnered $143 million in commitments from new and returning limited partners.

The third close will bring the firm’s fundraising efforts “very close” to its $200 million goal, a source familiar with the effort told Buyouts. The fund has a hard cap of $240 million, which is double the size of the firm’s predecessor fund.

Pennsylvania Public School Employees’ Retirement System and funds-of-funds manager Parish Capital Advisors were lead investors in Milestone Partners II LP, the firm’s first fund to take institutional money.

Milestone Partners has purchased three companies out of the third fund and all three closed in the past month. In late June, the firm recapitalized Fatz Café, a Greenville, S.C.-based restaurant chain, in partnership with management. The deal received debt financing and co-investments from GE Capital Solutions Franchise Finance and Madison Capital.

Two days later, Milestone Partners purchased Safemark Systems, an Orlando-Fla.-based provider of safes to hotels. Once again, Madison Capital provided debt financing and a co-investment, this time alongside New Canaan Funding. The firm’s most recent deal was to purchase Global Connection Inc. of America, a direct marketer of prepaid home phone services to poor people. Milestone Partners bought the company with the help of strategic buyer L6 Holdings Corp., and received co-investments from the deal’s lenders, Harbert Management Corp. and Bayan Mezzanine Partners.

Milestone Partners declined to comment on its fundraising effort. The firm makes control equity investments of $5 million to $25 million in manufacturing, distribution and service companies with valuations of up to $100 million. Milestone Partners got its start in 1995. The firm was founded by W. Scott Warren, a former managing director at mid-market merchant banking firms Philadelphia First Group and Beacon Capital. The firm has four partners in its St. Davids, Penn. headquarters.