Brentwood poised to launch Fund V

The Los Angeles-based firm has invested roughly 75% of its $440m fourth fund and plans to begin raising its next vehicle this year.

Brentwood Associates is on track to launch its fifth fund later this year, according to partner Bill Barnum.

The Los Angeles-based firm has invested roughly 75 percent of its fourth fund that closed on $440 million in 2008. Brentwood expects to make two more investments from Fund IV and is likely “one deal away” from coming back to market with Fund V, Barnum said, but the firm is also focused on returning capital to investors before launching its next fund.

“We’ll probably have a couple of liquidity events this year,” he said. “It’s more and more important as time goes on. LPs want to see several liquidity events before they re-up.”

Brentwood generated 6x and 9x return multiples on its Fund III investments in action sports retailer Zumiez and marketing business Oriental Trading Company, respectively.

A key fundraising tool for attracting new LPs, Barnum added, is the ability to show a high percentage of re-up investments from existing investors.

“It has to be really high in order for you to be successful with any new LPs,” he said.

Brentwood targets businesses in consumer-related industries with earnings before interest, tax, depreciation and amortisation between $5 million and $30 million, taking primarily majority but also minority stakes.

“We get our lower mid-market companies to grow to the point that they are upper-mid market before exiting,” Barnum said.

Current investments in Brentwood’s portfolio include premium apparel and accessories-maker Filson, specialty paper company Paper Source and athletic club operator Spectrum Clubs.

The firm was founded in 1972 and manages an equity pool of more than $750 million.