Having just closed its fourth buyout fund well below the original target, Toronto-based
The firm, which invests in the middle market in the United States and Canada, closed Imperial Capital Acquisition Fund IV on July 23 with commitments totaling $116.4 million, far short of its target of about $325 million.
The firm raised about $95 million for its third fund, which closed in 2003.
Founder Stephen Lister said that he was pleased to raise as much as he did for the firm’s latest effort, given the difficult environment.
“We walked into the worst fund-raising market in the history of the capital markets short of the Great Depression,” Lister said.
Lister expects to be back in the market to raise the firm’s fifth fund in the next 24 to 36 months. Imperial Capital didn’t employ a placement agent for its latest fund, but the firm will likely hire one or more for select markets when raising its fifth fund, Lister said.
Fund IV had secured about $100 million pledges by the end of May. Imperial Capital lost a number of institutional investors this time around, Lister said, but supplemented them with more than 100 wealthy individuals from Canada and elsewhere.
Institutional investors in fund IV include the Bank of Montreal, CIBC, Kensington Capital Partners and Nesbitt Burns. Lister said that terms on the fund are the industry standard 2% managemenet fee with a 20% carried interest.
Lister and his team are targeting investments in what they refer to as non-cyclical consumer products, items such as food, skin care and cosmetics, as well non-cyclical business services, such as warehouses and engineering consultants. Typical equity checks for the shop are between about $18 million and $45 million.
Imperial Capital closed on its first investment from the fund in December with the purchase of Schulman Associates, a Cincinnati, Ohio-based company that protects human subjects in pharmaceutical medical trials. Schulman Associates reviews research protocols and consent documents from clinical trials to evaluate compliance with regulations protecting people who work as subjects in the trials.
Lister founded Imperial Capital in 1989. He was formerly president of Startups Inc., a company he founded to provide equity financing and consulting assistance to high-growth, early stage companies. Imperial Capital has nine investment professionals. —Bernard Vaughan