Penfund closes Fund V for equity, debt investments

The Canadian firm closed its latest fund, Penfund Capital Fund V, on C$724m, above both its C$525m target and its predecessor, Penfund Capital Fund IV, which closed four years ago on C$460m.

Toronto-based mid-market firm Penfund held a final close of its fifth fund, Penfund Capital Fund V, on C$724 million (€490.28 million; $549.95 million), above its C$525 million target, according to a statement.

The new fund is almost twice as large as the previous fund, Penfund Capital Fund IV, which closed on C$460 million in 2012.

According to the statement, the fund received commitments from long-term Canadian limited partners, as well as new investors from the US, Europe, and the Middle East. Its investor base includes pensions, insurers, banks, family offices, and high-net-worth individuals, the statement said.

This fifth fund follows the same strategy as its predecessors by targeting mid-market companies in the consumer, business services, and healthcare sectors in North America, the statement said. On the equity side, it will mostly make co-investments, and selectively make stand-alone investments on its own. On the debt side, it will target second lien and mezzanine debt, but also target private high-yield, unitranche debt.

Although Penfund typically makes investments of between C$15 and C$90 million per transacion, this larger fund size will allow up to C$140 million per transaction, the firm said in the statement. According to its website, Fund V has already made seven investments so far, including a C$47 million equity and second lien funding to dermatological services platform Forefront Dermatology, and a C$20 million financing to GoodLife Fitness in February.

According to its website, Penfund, which was founded in 1979, is the oldest independent private equity firm in Canada. It manages about C$1.2 billion in assets. Performance metrics for its previous funds were not available.

Stikeman Elliott and Latham & Watkins were the legal counsels, and Park Hill Group was the placement agent to the fund.