Frontenac holds first close for Fund X

The lower mid-market firm has raised $165m for its latest fund, which has a $400m target and will invest in family- and founder-owned businesses.

Chicago-based lower mid-market firm Frontenac Company has held a first close on $165 million for its Frontenac X Private Capital Fund, according to a source with knowledge of the situation.

Fund X has a $400 million target and will follow the same strategy as the firm’s $315 million Fund IX, investing in family- and founder-owned businesses typically with annual revenues between $50 million and $150 million. Frontenac is not using a placement agent for Fund X, which has received commitments from more than 35 limited partners, the majority of which are existing investors.

Limited partners in Fund X include insurance companies John Hancock Mutual Life Insurance, Hartford Insurance and Northwestern Mutual Life Insurance. Roughly two thirds of investors in the first close are family offices.

Frontenac Fund IX, which is fully invested, purchased 10 founder-owned companies and an additional 18 add-on acquisitions. The firm has exited eight portfolio companies since the fourth quarter of 2010, mostly from Frontenac Fund VIII, generating 2.7x cash on cash returns.

Current investments include California-based industrial food processor Mercer Foods, hotel staffing firm Hospitality Staffing Solutions and outpatient healthcare services business e+CancerCare.

Frontenac invests in primarily in business services companies in sectors including healthcare, technology and distribution. The firm has made over 225 investments from nine private equity funds since its founding in 1971, and is typically the first institutional owner of its portfolio companies.