Its debut fund is about 75% invested. Peppertree Capital plans to start marketing Peppertree Capital Fund II in the first quarter of 2008, according to Managing Director F. Howard Mandel. The firm plans to visit the offices of pension funds, family offices and other institutional investors; it has not yet decided whether to hire a placement agent.
Mandel says that the firm has pursued a tightly focused strategy with its $75 million debut fund, investing from $3 million to $5 million in small media, telecom and business services companies. The firm, founded in 2003, sourced seven of its nine deals, and played lead or co-lead on the majority of them.
Given its small pool of capital, Peppertree Capital has usually invited co-investors on its deals, including Argosy Partners, M/C Venture Partners and Wachovia Capital. In its next fund, the firm will still seek co-investments. But it also plans to ratchet up its average investment range to $3 million to $15 million. “We’ve given away a lot of co-investment dollars”—more than $70 million worth, Mandel says. “We’d like to retain more of that.”
The firm has one exit to trumpet from fund I—the sale of an investment in 4G Towers, a Wisconsin-based leaser of tower space to cell phone companies. The deal returned several times capital, according to the firm. The best-performing company yet to be realized is TMW Systems, a Cleveland-based provider of trucking logistics software. Through a combination of add-on deals and organic growth, EBITDA has more than tripled at the roughly 225-employee company since Peppertree Capital first invested in September 2005. The firm has indicated to backers it wouldn’t sell the company without generating a 4x return on its money.
Mandel is one of four co-founders of Peppertree Capital. He and co-founder Jeffrey Howard previously worked together as partners at Dallas-based Tregan Partners, where they invested in media and telecom. The other co-founders Kevin McGinty and Jeffrey Milius previously worked together at Primus Venture Partners. —David Toll
GS closes Asian fund
Goldman targeted $350 million to $500 million for the fund of funds. The final close tops the $515 million raised this earlier this year when Asia Alternatives Management wrapped up its debut fund of funds.
Blackstone raises debt fund
Blackstone was assisted in the fund-raising by Park Hill Group.
Lehman aims for $1.5B
The fund is earmarked primarily for investments in buyout funds.
Fund raised about $500 million in 2005.
Energy Spectrum nears close
About 37 limited partners, including 20 first-timers, have signed on to the newest fund, known as Energy Spectrum Partners V, Benson told LBO Wire in an email.
Energy Spectrum didn’t use a placement agent.
The firm is seeking to raise a $300 million for Catterton Partners Small-Cap Fund to vehicle to take advantage of smaller opportunities that don’t fit the mid-market investment strategy of its main fund. The firm closed on a $1 billion buyouts fund last year. Investments from that fund include the buyouts of restaurateurs Outback Steakhouse and Cheddar’s and confectioner Brach’s.
Equity checks from the Greenwich, Conn.-based firm’s larger fund range from $30 million to $100 million. With the new fund, the firm plasn to invest from $10 million to $30 million to buy control stakes in fast-growing lower-middle-market companies.
Fund-raising began in the third quarter . A majority of the money is expected to come from Catterton Partners’ existing base of limited partners. Likewise, the fund would be run by the firm’s existing personnel, with Managing Partners Michael Chu and Scott Dahnke serving on its investment committee.
Most recently, the firm announced an agreement to buy specialty home goods retailer Restoration Hardware for $267 million, only to see Sears Holdings top the bid by 5 cents per share.
Milestone eyes $200M
Mid-market buyout shop Milestone Partners has begun fund-raising for its latest offering, Milestone Partners III, which is targeted at $200 million, according to LBO Wire. According to a person familiar with the firm, a $240 million hard cap has been established. The firm typically invests between $5 million and $25 million of equity per transaction in companies with values ranging from $15 million to $100 million.