Gridiron closes Fund III on $850m hard-cap

The mid-market buyout firm raced past its $750m target, doubling in size from Fund II.

Mid-market firm Gridiron Capital has closed its third flagship fund, Gridiron Capital Fund III, on its $850 million hard-cap, above its $750 million target, according to the firm’s co-founder and managing partner Tom Burger.

This latest fund from the Connecticut-based firm received commitments from limited partners in North America, Europe and Asia, the firm said in the statement on Tuesday. LPs include endowments, foundations, insurers, public and private pension funds, fund of funds, and high net-worth individuals.

Burger, who declined to indicate when the fund launched, added that about three-quarters of the investor base consisted of existing LPs. PEI data indicate that the Los Angeles Fire & Police Pension System committed $10 million to the fund, while Montana Board of Investments committed $20 million. Both are returning investors.

According to Burger, Fund III has already made four investments and deployed about $230 million, which makes it already about 27 percent deployed.

The latest fund is exactly double the size of Gridiron’s second fund. Gridiron Capital Fund II closed on its $425 million hard-cap in August 2012, above its $400 million target, according to the firm. Investors in the second fund also include SL Capital Partners, Constitution Partners, and Phoenix Life Insurance Company, according to PEI data, which also listed NovaFund Advisors as the placement agent for Fund II.

This second fund was generating an internal rate of return of 18.2 percent as of April 2015, according to PitchBook, citing Massachusetts Mutual Life Insurance.

Fund III follows its predecessors’ strategy of making control investments in mid-market manufacturing, business services, and specialty consumer companies in the US and Canada. More specifically, the firm targets companies with $8 million to $50 million in EBITDA, according to Gridiron’s website

It was unclear whether the firm would be making larger investments or pursuing a greater number of deals given the doubled size of the latest fund. 

Gridiron’s current portfolio includes automotive reconditioning servicer Dent Wizard in Montana, Colorado-headquartered fast casual Asian restaurant chain Tokyo Joe’s, and employee recognition programme provider Engage2Excel in North Carolina.

The Gridiron team is led by co-founding managing partners Burger and Eugene Conese. Burger was previously a managing director at another Connecticut-based mid-market private equity firm, RFE Investment Partners, according to his LinkedIn profile. Earlier in his career, Burger was a managing director at mid-market private equity firm Butler Capital, a case manager at the Boston Consulting Group, and a manager at General Electric.

Conese previously served as president and chief operating officer of Greenwich Air Services, a Connecticut-based aerospace repair and refurbishment service provider that was acquired by General Electric in 1997, according to Gridiron’s website. Earlier in his career, Conese was the president of silicone rubber seal provider Haskon Corporation, and specialty packaging supplies provider EPCO Technologies.

Gridiron now manages $1.6 billion in assets, according to Burger.

Ropes & Gray was the legal counsel for Fund III.