JW Childs gets busy with $125m SPAC, 3x exit

The Boston-based firm may consider hitting the market with a fourth fund once the term of the special purpose acquisition company runs out after 21 months.

JW Childs Associates, a Boston-based buyout firm, recently raised $125 million in a special purpose acquisition company and exited a 2006 investment, reaping about a 3x return.

The SPAC, JWC Acquisition Corp., offered 12.5 million shares at $10 each. The SPAC, also known as a blank cheque company, has 21 months to find a target and invest the capital, according to Adam Suttin, JW Child’s co-founder and partner.

During the 21 months of the SPAC’s life, JW Child’s cannot raise any other investment vehicles, which means the firm has no plans to launch a fourth fund until the SPAC completes an acquisition. The firm’s most recent fund, a $1.8 billion vehicle raised in 2002, has about $100 million left for add-on investments, Suttin said.

Fund III was holding steady with a 17.92 percent internal rate of return and a 1.5x cash-on-cash multiple, as of February, according to performance information from the University of Texas Investment Management Company.

Raising capital through the SPAC is a “more efficient and faster process than raising traditional private equity funds”, Suttin told PEO during a recent interview.

The firm also announced it was exiting Advantage Sales & Marketing, which it bought into along with BAML Capital Partners in 2006 for just over $1 billion. The firm invested a total of about $200 million in Advantage Sales & Marketing while it held the company and expects a roughly 3x return on the investment, Suttin said. The firms sold the company to Apax Partners.

The firm has endured some heavy turnover in the past while struggling to secure investors for a fourth fund. Former president Dana Schmaltz, and chairman of the firm’s investment committee Ted Yun, left to found their own firm in 2007.