Firm Name: Wellspring Capital Management
Fund Name: Wellspring Capital Partners IV LP
Target Investments: Companies with $50M+ Revenues
Firm Website: www.wellspringcapital.com
Wellspring Capital Management seems to have learned an important fund-raising lesson: Get it while you can.
The New York-based firm is nearing a $1 billion final close on its fourth fund, having already secured $925 million in limited partner commitments. None of that money, however, will be invested anytime soon, as the firm’s third fund still has enough dry powder to add several new portfolio companies. Instead, the first Fund IV disbursement isn’t expected to come until between six and nine months from now.
“We’re working on a lot of things right now, and didn’t want to get stuck if three good deals all suddenly came up at the same time,” explained Bill Dawson, a partner with Wellspring. “We are raising the fund now because we’re able to.”
Such a strategy might sound like premature vigilance, but Dawson speaks from experience. Wellspring began raising its third fund with a $500 million target in early 2002, but was forced to hold a $400 million interim close later that year when it ran out of available Fund II capital to make new investments. By the time that Fund III closed on an oversubscribed $665 million in April 2003, it already had made three investments, including a much-publicized $180 million acquisition of Vistar Corp. from International Multifoods Corp.
The firm plans to maintain its investment strategy of leading MBOs, recaps, turnarounds and going-private transactions for companies with at least $50 million in revenue. Its most recent deal was announced earlier this month, and involved Wellspring taking a majority ownership position in a Southwestern convenience store and fuel distributor called Susser Holdings LLC. No financial terms were disclosed for the deal.