US mid-market firm Castanea Partners has closed its latest fund, Castanea Partners Fund III, on $575 million (€420 million). Fund III includes a $475 million core fund and a $100 million sidecar fund to be used to support bigger deals.
Fund III is significantly larger than Castanea’s previous fund, which closed on $207 million in 2004and was the first to include external investors. But since then, Castanea has built up its investment team and practice, founding partner Robert Smith said, and the firm’s increased capacity and experience is reflected in the larger size of Fund III.
The new fund will make investments of between $10 million and $75 million, in line with the previous fund, in buyout, growth and acquisition deals in small- to mid-market companies in publishing and information services, education, consumer brands, specialty retail and marketing services.
The increased fund size means he firm will have “the ability to write the whole check”, Smith said, instead of cubbing with other firms.
Castanea has not invested from the new fund, although deal flow is strong and the firm has signed letters of intent for some possible investments.
Fundraising took just a few months. All the previous seven LPs, which include Yale University and Princeton University, returned for Fund III, and increased their commitments, alongside several new investors.
Castanea has made three exits this year, which it called “successful” though the firm did not disclose any financial details. In March the firm sold juice and tea maker Fuze Beverages to Coca-Cola; healthcare research and advisory firm Decision Resources to Providence Equity Partners; and premium children’s apparel brand Hanna Andersson to Kellwood Company.