Kainos closes on second fund since spin off

The firm, which spun out of HM Capital Partners about four years ago, closed its second fund on nearly double the amount of capital raised for its debut fund.

Kainos Capital, which focuses on the food and consumer sector, has closed its second fund, Kainos Capital Partners II, on its $895 million hard-cap, according to the firm.

The Dallas, Texas-based firm spun out of HM Capital Partners in early 2013 with the help of Canada Pension Plan Investment Board, which was one of the main investors in the first fund.

Kainos Capital Partners I previously raised $475 million in 2013, closing above its $400 million target. The fund is fully invested at this point.

Kainos Capital Partners II launched at the end of February with a $750 million target. It held a first close shortly after on an amount greater than how much Kainos had raised for its first fund, according to a person familiar with the matter, who added that most of the capital for that close came from existing investors. Kainos held a second close in May almost on target.

About half of the vehicle's investors are based in the US, while the remainder are based in Europe and Canada, the person said. Limited partners include Texas Municipal Retirement System, which committed $50 million to the fund in August and is targeting an 18 percent return and 2x investment multiple, according to investment recommendation documents found on its website.

Kainos declined to comment on the fundraise. 

While Fund II is significantly larger than its predecessor, the strategy of investing in food and consumer businesses will remain unchanged. However, while deals made out of Fund I targeted companies in the $10 million to $100 million in EBITDA range, deals out of Fund II will be greater in size. Kainos plans to make about 10 investments out of the new fund.

Among Kainos's recent exits is the $300 million sale of InterHealth Nutraceuticals, which makes dietary supplement ingredients, to Swiss chemicals and biotechnology company Lonza.

The firm is led by Andrew Rosen, Robert Sperry and Sarah Bradley, who founded Kainos Capital in 2013 to focus on lower mid-market investments in North American food and consumer products companies.

It has a 12-person investment team led by six partners. In anticipation of the new fund, Kainos made new hires, including Jay Desai as managing director and Kevin Elliott as partner. It also promoted several professionals to partners.

Kainos hired Lazard as placement agent for the fund.