North Castle Partners, which famously turned lemons to lemonade with a diet company called Atkins Nutritionals Inc., is talking to prior investors about raising a fifth fund with a target of $250 million.
The Greenwich, Conn.-based firm expects to reach a first closing in the neighborhood of $100 million, the size of its 2007 predecessor fund, by the end of the second quarter, according to Charles F. “Chip” Baird Jr., founder and managing partner. The firm is using Farrell Marsh & Co. as its placement agent.
North Castle Partners IV LP has already returned committed capital to investors from realized investments, according to Baird, and when you add in unrealized deals the firm estimates the fund’s investment multiple at 2.4x. The portfolio has about eight companies, including one signed about two weeks ago but not yet announced. The firm already has a letter of intent in place on the first deal of its fifth fund, a deal expected to close around June.
North Castle Partners, an early pioneer of industry-focused funds, the focus in its case being health, wellness and active living, scored a big home run for the fund through the turnaround of Atkins Nutritionals, which sells products related to the Atkins diet program.
The firm bought Atkins Nutritionals from its lenders in 2007 for $100 million following a bankruptcy filing. At the time the company was generating $100 million in revenue and $14 million in EBITDA. By the time the firm sold the company to Roark Capital Group for $301 million in December 2010 after a thorough overhaul, the company was generating $210 million of revenue and $37 million in EBITDA.
“The whole portfolio is in really good shape,” Baird said of Fund IV. Another particularly promising company, according to Baird, is Cascade Helmets Holdings, a maker of eyewear and helmets used in lacrosse, which North Castle calls “the fastest-growing team sport in America.”
Other senior leaders at North Castle Partners, which was founded in the late 1990s, include Louis Marinaccio, Alison Minter and Jonathan Canarick. Prior investors in North Castle funds include Auda Advisor Associates, CMS Cos. and TIAA-CREF, according to Dow Jones.