Roark widens LP base in race to $1.5bn

The Neal Aronson-led firm welcomed new investors into its third vehicle, which will continue Roark’s strategy of investing in well-known brands like Arby’s and Cinnabon.

Roark Capital Group has closed its third fund on its hard-cap of $1.5 billion to invest in some of the best-known consumer brands in the market.

The firm started pre-marketing Fund III late last year, and had collected $462 million as of April, according to a limited partner with the firm and filings with the US Securities and Exchange Commission.

Lazard worked as placement agent on the fundraising.

The firm was able to add some new LPs to its fund roster, including endowments and foundations, public and corporate pension funds, sovereign wealth funds and family offices, according to a statement. Fund III also saw “strong support” from existing investors.

Roark closed its second fund on $1 billion in 2008 and raised its debut fund in 2005, collecting about $413 million. As of earlier this year, Fund I was generating a 1.7x multiple and a 13 percent internal rate of return, while the second fund was producing a 1.5x multiple and a 23 percent IRR, according to the LP in a prior interview.

Roark focuses on consumer and retail and services sectors, and looks for businesses with franchise opportunities. Last year, the firm paid $130 million cash to buy the Arby’s fast food chain from Wendy’s/Arby’s Group. As part of that deal, valued at $430 million, Roark assumed $190 million of Arby’s debt.

Since inception, the firm has bought 22 franchise/multi-unit brands, which collectively have more than 4,100 franchisees, 11,000 locations and $10 billion in system-wide revenues across 50 states and 56 countries.

Earlier this month, the firm acquired massage therapy company Massage Envy from Sentinel Capital Partners for an undisclosed amount. The company was Roark’s third acquisition of 2012.

Roark is led by managing partner and founder Neal Aronson, and president Jeff Keenan.