Southfield holds first close, buys insurance products company for $41 mln

Firm: Southfield Capital

Fund: Southfield Capital II LP

Target: $175 million

Amount raised: ~$25 million

Placement Agent: Stonington Capital Advisors

Return investors contributing to the first close by Greenwich, Connecticut-based Southfield Capital, which is seeking $175 million altogether, included two large family offices and a secondary buyer, according to a source familiar with the fundraise. The secondary buyer invested in the first fund by purchasing an interest from one of the original limited partners. The first-close tally includes the general partner commitment. Stonington Capital Advisors is placing the fund.

The first-close documents for Fund II provided Southfield Capital another year in which to reach a final close, according to the source, who expects the fundraising to last into 2016.

The fresh capital quickly came in handy: Southfield late last month combined $8 million from its fund with money from co-investors to cut an equity check toward the $40.9 million purchase of Vanguard Dealer Services, according to data provided by the source. The Fairfield, New Jersey-based company, which provides insurance and financial products to franchised automotive dealerships, generated trailing 12-month EBITDA of about $5.9 million on revenue of $12.5 million at the time of closing. Southfield Capital is targeting a 4x multiple on invested capital and IRR of 29 percent on the deal, according to the data.

East West Bank provided senior debt to finance the purchase of Vanguard Dealer Services, while Fidus Investment Corp supplied subordinated debt.

Managing Partner Andy Levison, formerly head of leveraged finance at DLJ, founded Southfield Capital as the successor to Levison & Co, which he founded in 2002. In 2005, Southfield Capital closed its debut fund at $125 million in committed capital.

Southfield’s partners include Andy Cook, who joined Levison & Co (Southfield’s predecessor) in 2002 after serving as an analyst at CRT Capital GroupHeb James, who joined Southfield in 2008 after working as an associate in the investment banking group at Oppenheimer & Co; and Tim Lewis, who joined Southfield in 2014 after working as a partner at private equity firm Atlantic Street Capital. The firm’s chief financial officer is Jonathan Goldstein.

Levison and other Southfield executives could not be reached for comment.

The firm typically takes controlling equity stakes in U.S. or Canadian companies generating $4 million to $12 million of EBITDA in the fields of outsourced business services, specialty finance and value-added distribution. The firm’s website lists two current investments — BioPharm Communications, a New Hope, Pennsylvania-based company that develops marketing programs for healthcare companies; and TS3 Technology, a provider of electronic manufacturing services based in Houston, Texas.

Action item: Reach the firm at (203) 813-4100.