Firms & Funds

TSG Consumer Partners eyes $2 bln for seventh fund

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  • TSG nets 43.4 pct on previous fund
  • Former Vitamin Water investor targeting $700 mln more than Fund 6
  • Carry increases to 25 pct when firm clears 2x hurdle

TSG Consumer Partners is back on the market with its seventh flagship fund targeting $2 billion, according to an LP source with direct knowledge of the fundraising.

“They were one of our top picks, if not the top pick,” the LP said.

The source’s enthusiasm for the San Francisco firm’s latest vehicle is warranted given its recent track record. TSG’s previous fund, a $1.3 billion 2011 vintage,netted a 43.4 percent IRR as of March 31, according to data provider Bison.

Another source said TSG had been targeting $1.5 billion when it began reaching out to limited partners earlier this year, and that the firm could hold a final close by the end of the year.

TSG7 LP is offering a two-tiered carry structure, said one LP source. The firm will collect 20 percent carried interest on returns of up to 2x and will take 25 percent on profits that exceed 2x.

TSG declined to comment.

The New Jersey State Investment Council will consider committing to the fund at its September 23 meeting, according to its agenda. New Jersey CIOChris McDonough did not respond to a request for comment.

TSG closed its previous fund, TSG6 LP, after roughly two months on the market, beating its target by $300 million, Managing Director James O’Harasaid at the time. The regulatory filing for that fund does not list a placement agent.

TSG invests in branded products and consumer services companies across a variety of sub-sectors, ranging from restaurants to pet care. Previous investments include the beverage brand Vitamin Water and Pop Chips, which produces low-calorie snacks. The firm typically invests $50 million to $300 million per deal, usually in companies with up to $200 million of EBITDA.

The firm has approximately $3 billion of equity capital under management.

Action Item: TSG can be reached via email through its website: http://www.tsgconsumer.com/contact/