San Francisco’s Swander Pace Capital closed its third fund with $325 million, signaling continued investor interest in consumer product buyouts by being oversubscribed by about $100 million.
The fund, SPC Partners III, began raising capital this past February and had its final close October 23.
New limited partners Allianz Private Equity Partners and Duke University joined previously investing LPs New York Life Capital Partners, and PPM America, among others. There were a moderate number of new LPs with this fund. The overwhelming bulk of investment came from existing LPs. Endowments were the largest kind of new limited partner for Swander Pace, followed by pension funds.
Swander Pace Capital acquires lower middle-market consumer products companies valued between $25 million and $150 million. Like its last fund, SPC Capital Partners Fund II, the third fund will have its greatest investment focus in food companies followed by household products and personal care products. The investment period will last between four and five years.
Managing Director J.B. Handley says that his firm’s success in raising an oversubscribed fund in only nine months is an indication of investment confidence in the lower middle-market and consumer products spaces.
“LPs appear to be interested in buyout funds flying below the radar screen in the lower middle market,” says Handley. “Consumer products is an area that people are much more interested in over time. With more volatile economic conditions out there, there was a real appeal to our investment focus.”
Companies that Swander Pace has invested in include Deming, N.M.-based Border Foods; Tulsa, Okla.-based Nonni’s Food Company, which has made numerous acquisitions; and Cincinnati umbrella manufacturer Totes Isotoner Corp.
This past March, Swander Pace opened an office in Bedminster, N.J., which houses two investment professionals with plans to hire two or three more.
The firm overall has three managing directors and four directors. Swander Pace’s previous fund, SPC Capital Partners II, a vintage 2000 fund, raised a total of $220 million. The firm’s inaugural fund raised $82.5 million with a vintage year of 1997.
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