TSG’s Latest Fund Expected To Fill Quickly

Firm: TSG Consumer Partners

Fund: TSG6 LP

Target: $1 billion

Placement Agent: None

TSG Consumer Partners, the consumer product-focused firm based in San Francisco, is reportedly having little trouble rounding up $1 billion for its sixth fund.

TSG Consumer typically invests $15 million to $100 million for control-stake or minority investments in consumer products or services companies generating EBITDA of $3 million to $50 million. Its portfolio has included several household names, including kitchen and bathroom cleaner Comet, dandruff shampoo Denorex and Smart Balance Foods.

The fact that TSG Consumer is seeking $100 million more than its $900 million previous fund, closed in 2007, suggests the firm’s consumer companies weathered the economic downturn fairly well. That fund was generating a 10.21 percent IRR as of Dec. 31, 2010, according to the Colorado Public Employees’ Retirement Association.

The firm is not employing a placement agent, according to a source familiar with the firm. “That will get raised quick,” the source said in an e-mail, adding that the firm has an “outstanding” track record. Another source close to TSG Consumer said that the fund would close soon, although he declined to discuss it further.

The firm and its founder, Chuck Esserman, have established a solid reputation over the years for some blockbuster returns. In 2006, the firm earned 13x its $40 million of invested capital in Glaceau Vitaminwater. Under the firm’s previous incarnation, The Shansby Group, Esserman was involved with the turnaround of Famous Amos Chocolate Chip Cookie Co. LLC, which yielded a 20x return, according to a 2009 Buyouts profile of Esserman. The firm’s fourth fund, a $500 million 2002 vintage, was generating a 39 percent internal rate of return as of Dec. 31, 2010, according to Colorado PERA.

Esserman, who started his career at Bain & Co., co-founded The Shansby Group with Gary Shansby, the former CEO of Shaklee Corp., in 1987. In 2005, the firm changed its name to TSG Consumer Partners.

Calls to Esserman were not immediately returned.