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Philly Shop Closes Second Fund At $151.5 Million

Firm: Inverness Graham

Fund: Inverness Graham Investments II LP

Amount Raised: $151.5 million

Inverness Graham, a lower mid-market buyout firm targeting manufacturing and services companies, was expected to announce the final close of its second investment fund last week at $151.5 million.

The tally for Inverness Graham Investments II LP includes $10 million allocated to a parallel co-investment vehicle, according to a press release. The firm, based outside of Philadelphia, closed the fund on Aug. 31. Executives at the firm declined to comment.

Inverness Graham targets high growth, innovative manufacturing and service companies with enterprise values of less than $75 million and EBITDA between $3 million and $10 million. The firm, founded by senior executives of the Graham Group of industrial businesses, has about 10 investment professionals and manages more than $250 million.

The firm raised $125 million for its first fund, Inverness Capital Partners, in 2003. Investors in that fund include Air Products & Chemicals, Camden Partners and Mercantile Bankshares, according to the Dow Jones Directory of Alternative Investment Programs.

The length of time it took Inverness Graham to raise the fund illustrates how difficult the fundraising market has been for smaller, lesser known shops. The firm mentioned in a January 2008 press release that it expected to raise Fund II later that year, and it held a first close on the fund at $62 million in December 2009, according to one source, who said the original target for the entire fund was $200 million.

Still, in a press release provided to Buyouts by the firm, Senior Managing Principal Ken Graham said the firm was “extremely pleased to have exceeded our fund raising goals in this market,” thanks to support from endowments, pensions, and fund of funds in the United States and Europe. Skip Maner, COO, said the firm sees “great opportunities” in “wireless & mobility, medical & healthcare, and energy & power.”

The firm has made two platform investments so far with the fund: In January it bought medical components designer and manufacturer TechDevice (which, in turn, has done an acquisition of its own), and in April it bought Nobles Manufacturing, a supplier to the aerospace and defense industry.