Ridgemont ups bitesize potential with larger fund

The firm – a spin out from Bank of America in 2010 – attracted roughly one-third of its $1.65bn Fund III from non-US investors, up from 12% in Fund II.

Ridgemont Equity Partners, a US mid-market buyout firm, is considering slightly larger cheque sizes and target companies after a significant jump in fund size for its latest flagship.

The Charlotte-headquartered investor amassed $1.65 billion for Ridgemont Equity Partners III last week, according to a statement from the firm. Its 2015-vintage predecessor closed on $995 million.

“Our average bitesize will go up on the margin or modestly but certainly not dramatically,” partner Travis Hain told Private Equity International. Fund II’s average cheque size for non-energy investments was just under $60 million.

“If you look at what we did in Fund II we could have deployed almost this amount if we hadn’t done some significant co-invest for our LP base. It’ll just be a little less co-invest or a little higher ownership in each company, or a combination of both.”

Fund III attracted roughly one-third of its commitments from non-US limited partners, representing Europe, the Middle East and Asia, founder Walker Poole added. Such investors accounted for around 12 percent of Fund II.

Ridgemont made one of the four largest commitments to Fund III, Poole said, though he declined to specify the amount. Fund III held a first close on its $1.25 billion target in July and did not have a formal hard-cap.

“We’ve made some significant lateral hires from other firms and so I think LPs saw the investments we were making in building out the team and [were] recognising that we now have the boots on the ground to manage a much larger portfolio,” Poole added.

The vehicle will target around a 2.5x to 3x gross money multiple and a gross internal rate of return at least in the mid-20s, Hain said. Fund III has the same terms as Fund II, though the firm declined to elaborate further.

Ridgemont invests across four sectors: business and industrial services, energy, healthcare and tech and telecoms. Fifty percent of each energy deal comes from its $320 million Ridgemont Equity Partners Energy Opportunity Fund, which closed last year and is now one-third deployed, Hain said.

Ridgemont was founded in 2010 by a former Bank of America Capital Investors team that spun out of Bank of America. The firm, which has offices in Charlotte and Dallas, had $3.5 billion of assets under management as of December, according to its website.