Toronto Shop Nears Finish For Fourth Fund

Firm: Imperial Capital

Fund: Imperial Capital Acquisition Fund IV LP

Target: C$350 million

Placement Agent: None

Executives at Imperial Capital have raised C$110 million ($101 million) for their fourth fund and expect to stop raising cash by the end of June, a source familiar with the fundraising told Buyouts.

The Toronto-based buyout shop’s target for Imperial Capital Acquisition Fund IV LP is C$350 million, and firm executives might still manage to get there. There is a “strong possibility” of another C$50 million in commitments from institutional investors and another C$50 million from wealthy individuals, our source said, as well as up to seven other wealthy families that may invest as much as C$25 million each.

Imperial Capital changed course as to who they targeted as limited partners midway through the effort after feeling the impact of the financial crisis firsthand, our source said. The shop started raising the fund in March 2008 and had a book of C$200 million in likely commitments from U.S.-based institutions that collapsed to C$50 million when the crisis deepened later in the year. Once that happened, Imperial Capital, which did not employ a placement agent to help raise the fund, changed its focus to wealthy individuals and families.

LPs include Bank of Montreal, CIBC, Kensington Capital Partners, a Toronto-based fund-of-funds; and Nesbitt Burns, a Toronto-based boutique investment bank. So far, about 100 wealthy individuals have also committed to the fund, whose terms are the “2 and 20” industry standard.

The firm plans to invest in non-cyclical consumer products businesses, such as food, skin care and cosmetics, as well non-cyclical business services, such as warehouses and engineering consultants. Typical equity checks are between C$20 million to C$50 million.

Imperial Capital professionals made their first investment with the fund in December, buying Schulman Associates, a Cincinnati, Ohio-based company that protects human subjects in pharmaceutical medical trials. The company reviews research protocols and consent documents from clinical trials to evaluate compliance with regulations protecting people who work as subjects in the trials.

The firm was founded in 1989 by Stephen Lister, a former president of Startups Inc., a company he set up to provide equity financing and consulting assistance to high growth, early stage companies. The firm has nine investment professionals.