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S.F. Shop Secures $100M For Another Bridge Fund

Firm: Gryphon Investors

Fund: Gryphon Partners 3.5-A LP

Target: $250 million

Amount Raised: $100 million

Placement Agent: None

The San Francisco-based firm is seeking to raise a total of $250 million for the fund, Gryphon Partners 3.5-A LP, rather than raising larger fund IV. Firm executives decided on this strategy because they did not want to be distracted from deals in a challenging fundraising environment that can necessitate several meetings a week, often for two or more years, which can tax the resources of a mid-size firm.

The firm’s feeling, in effect, was, “let’s raise half the money in half the time,” the source said. Limited partners may also find it attractive because it has a shorter three-year investment period rather than a six-year investment period for a larger fund, the source said.

The initial close of $100 million came from existing investors, the source said. The firm will formally launch the process for other existing investors as well as new investors in the coming weeks.

This isn’t the first follow-up pool of capital Gryphon has tacked onto its third fund, which originally raised $415 million in commitments in 2006. The firm raised an additional $100 million for the fund in 2007.

Gryphon typically invests $25 million to $75 million of equity in buyouts and growth equity investments in the business services, consumer products and services, general industries and education, and health care sectors.

Among the firm’s most recent deals was its July sale of Intelligrated Inc., a maker of conveyor systems for industrial warehouses, to Permira Advisers Ltd in a deal valued at $500 million. The firm had already made back its investment via dividends, though its total return on capital from the deal isn’t clear.