Private Equity News & Analysis

EdgeStone corrals C$508m in interim close

Toronto-based EdgeStone Capital has held an interim close as the firm looks to raise one of the larger funds in Canada.

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Toronto’s EdgeStone Capital held an interim close on roughly C$508 million (US$436 million; €361 million) for its third fund, EdgeStone Capital Equity Fund III, a vehicle that is seeking C$600 million, according to documents filed with the Securities and Exchange Commission.

Samuel Duboc, president and managing director, EdgeStone Capital

The firm has already pulled in support from 31 investors. The General Electric Pension Trust and The International Bank for Reconstruction and Development are two limited partners that have already committed to the new vehicle.

EdgeStone, formerly known as NB Capital, was originally launched in 1999 as an affiliate of National Bank Financial. The firm spun out in 2002, changing its name to EdgeStone, with National Bank and Canada Pension Plan serving as significant backers. A year later, EdgeStone raised its second later-stage private equity fund, taking in more than C$361 million in commitments.

The latest fund, if it meets its target, will be one of the larger private equity vehicles in Canada. The top end, however, is still dominated by the pension plans, such as Teachers’ Private Capital, which actively makes direct investments in private equity. Outside of the pensions, though, Onex Corp. still holds the largest fund in the country, at C$2.2 billion in size, while TD Capital spinout Birch Hill Equity Partners recently crossed the C$800 million mark with its latest vehicle.

Merrill Lynch & Co. has been hired as placement agent to market the fund.

Even with the larger vehicle, EdgeStone is not shifting from its mid-market focus. According to the firm’s Web site, it typically writes equity cheques of between C$25 million and C$60 million in size.

Past success stories for EdgeStone include investments in hair replacement outfit Hair Club for Men, which was sold to Regis Corp. in 2004, and Farley Windows, a vinyl window manufacturer that was sold to Gienow Windows & Doors and now trades as a Canadian income trust.

Samuel Duboc and Gilbert Palter head the firm.