PNC Equity Branches Out For New Fund

Firm: PNC Equity Partners

Fund: PNC Equity Partners II LP

Amount Raised: $272 million

With its newest fund, PNC Equity Partners has made its largest stride yet out from under the shadow of its corporate parent.

The lower mid-market firm based in Pittsburgh last month closed on $272 million for PNC Equity Partners II LP, marking a $75 million increase in size from its predecessor, closed in 2001. Unlike with Fund I, for which parent PNC Financial Services Group provided the majority of the equity, PNC Equity Partners took in only $75 million from its parent this time. The rest came from 14 institutional and seven individual investors.

The Pennsylvania Public Schools Employees’ Retirement System re-upped for PNC Equity’s second fund, kicking in a bigger contribution, said David Hillman, PNC Equity’s founding partner. The firm also snagged a new limited partner in the Pennsylvania State Employees’ Retirement System. The firm traces its roots back 25 years, but until 2001 PNC Equity only invested off of its parent company’s balance sheet.

The LBO shop has already started putting the money to work. Earlier this month, it completed the acquisition of Bachrach Inc., a New Kensington, Pa.-based a maker of gas-detection equipment. PNC Equity did not disclose deal terms.

Earlier this year, the firm invested $16 million of equity in Lone Star Overnight, a regional shipping company that serves Texas and surrounding states. PNC Equity bought the company from Brazos Private Equity. Lone Star is ripe for investment in a technological upgrade to increase efficiency, Hillman said.

In general, PNC Equity seeks out companies generating between $25 million and $125 million in revenue. The firm targets three industry sectors: niche manufacturing, value-added distribution and business outsourcing.—J.H.