Milestone Partners Gears Up For Fund Launch

Milestone Partners is expected to start fundraising for its latest pool this summer, a source told sister Web site peHUB.

Radnor, Pa.-based Milestone, a lower-middle market firm, is looking to raise $350 million, according to the source and a June 2011 document from Pennsylvania’s Public School Employees’ Retirement System (PSERS). Milestone Partners IV LP has a $450 million hard cap, PSERS said.

The firm’s last fund, Milestone Partners III LP, raised $240 million in 2008, while the second fund collected $120 million in 2004. Milestone II has a 24.1% IRR while the third fund has an 8.7% IRR, PSERS says (PSERS invested about $30 million in fund II and $60 million in fund III), the document said.

Milestone hasn’t officially started fundraising for Fund IV, although a PPM has been distributed to a select number of LPs, the source said. A first close is expected in July or August, the person said. Capstone Partners is the placement agent.

A generalist firm, Milestone has invested in FATZ, a casual dining restaurant, as well as Learn It Systems and Avure Technologies. The buyout firm typically invests from $5 million to $40 million per deal although Milestone’s sweet spot is $20 to $25 million.

Fundraising for Milestone IV may actually go smoother than the firm’s last fund. Milestone, which didn’t use a placement agent for Fund III, announced a first close for the pool in March 2008. Lehman Brothers filed for bankruptcy the following September which severely decimated the financial markets.

Luckily, Milestone had collected the bulk of commitments for Fund III between the first close and the Lehman debacle, a source said. But Milestone kept the pool open since some LPs were still in the process of closing their commitments, the person says. Milestone hit its hard cap of $240 million for Fund III in March 2009.