With roots to HGGC, Tower Arch Capital closes debut fund at $272 million

Firm: Tower Arch Capital

Fund: Tower Arch Partners I LP

Target: $175 million

Amount Raised: $272 million

Placement Agent: Shannon Advisors

Legal counsel: Goodwin & Procter

Tower Arch Capital said the effort behind Tower Arch Partners I LP beat its target of $175 million and reached an expanded hard cap, with backing from chief executive officers and management team members from prior investments, according to a prepared statement from the firm.

“Our team provides a unique set of strategic and operational skills to help business owners effectively grow their businesses and create value,” Rhett Neuenschwander, partner and co-founder of Tower Arch Capital, said in the prepared statement. “The fact that so many managers and business owners who have first-hand experience working with us are now investors and advisers to the fund is a fantastic endorsement.”

Neuenschwander was a partner at Huntsman Gay Global Capital, which changed its name to HGGC last year. He also worked as principal at Sorenson Capital Partners and as an associate at Highland Capital Partners, according to the Tower Arch website. Other HGGC veterans at the firm, all identified as co-founders and partners, include David Parkin, Ryan Stratton and David Topham.

Tower Arch Capital said its first investment has been in Future Telecom Inc, a provider of specialty boring services for fiber and communications companies. Terms of the deal were not disclosed.

A phone call to the firm by Buyouts was not returned.

Tower Arch Capital said it targets U.S.-based companies with revenue ranging from $10 million to $100 million and EBITDA of $3 million to $15 million. It searches for passionate management teams, proven business models with recurring revenue, defensible market positions and growing end-market demand, according to its website.

After initial support from friends and family, including a cornerstone investor, Tower Arch Capital expanded the fundraising effort to include institutional investors, Buyouts reported in February. The firm has ties to Jon M. Huntsman Sr., chairman of Huntsman Corp and co-founder of HGGC, who is the father-in-law of Parkin. The Huntsman name also heads up Huntsman-Lion Capital LLC, which launched last year with the co-founders of Lion Chemical Capital, Peter DeLeeuw and David DeLeeuw.

Huntsman provided a testimonial on Tower Arch Capital’s website: “I have closely observed the personal integrity, investing capabilities, and operating skills of the four founding members of Tower Arch Capital. They are uniquely qualified to create significant value with entrepreneurial and family-run businesses.”

The closing of Tower Arch Partners I comes after Tower Arch Capital filed an amended Form D on May 16 that disclosed $123 million raised for the fund, with 50 investors. The date of first sale for the fund was listed as Sept. 9 of last year. The firm filed its first Form D for the fund on May 16, 2013, with no investor and no money raised at that time.