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R.I. Shop With Aging Portfolio Seeks $800M

Firm: Nautic Partners LLC

Fund: Nautic Partners VII LP

Target: $800 million

Placement Agent: None

The firm is seeking an amount identical to what it raised for its previous fund in 2007. Nonetheless, this was seen as an ambitious target given a difficult fundraising market and especially considering that Nautic’s 2007 fund still has a lot to prove.

Nautic invests in growth financings, recapitalizations and leveraged buyouts in the business services, health care and manufacturing industries. It typically invests $25 million to $75 million in companies with EBITDA of $10 million to $30 million. 

Its sixth and most recent fund—for which the firm had originally sought $1.2 billion—had generated a .99x investment multiple and a .5 percent internal rate of return as of Dec. 31, 2011, according to the New York City Employees’ Retirement System, which had committed $30 million to the fund. The estimated value of the fund’s holdings as of that date was $23.6 million.

Nautic’s $1 billion fifth fund, closed in 2001, appears to be faring better, generating a 16.63 percent IRR as of Sept. 30, 2011, for the California State Teachers’ Retirement System, which committed $200 million to the fund.

These numbers could change, however, if Nautic can successfully exit a number of aging investments in its portfolio. According to a Buyouts analysis of the firm’s portfolio in February, 15 companies, or 60 percent of the portfolio listed as active on its Web site at that time, had been in the portfolio since 2007 or earlier, and eight companies, or 32 percent, had been in the portfolio since 2005 or earlier. Since then, the firm has exited at least one company, selling NEPTCO Inc., a manufacturer of wire and cable products it had bought in 2000, for $122 million, to Chase Corp. for $67 million, according to Capital IQ.

An executive at Nautic did not respond by deadline to calls seeking comment.