Signal Hill Equity Partners preps Fund III

The Toronto-based firm will likely target more than C$100m for its Fund III, which will invest in mid-market companies in Canada in a variety of industries.

Toronto-based mid-market firm Signal Hill Equity Partners is preparing to come to market with its third private equity fund, which will begin fundraising at the end of this year, according to managing partner James Johnson.

The target amount for Fund III has not been decided yet, though the firm has received enough interest from investors to raise more than its Fund II, which collected C$100 million (€75 million; $100 million) in 2008. 

“Our existing investors have already indicated that they’re prepared to support us in our next fund,” Johnson said. 

Signal Hill’s Fund II is about 75 percent invested. The firm invests in a variety of sectors in Canada, including financial services, specialty distribution, business services and manufacturing. 

“We focus on investing in companies where there’s a succession issue requiring a hands-on operational involvement,” Johnson said.  The firm has an in-house team of four operations-focused individuals, and recently hired Mayank Chadha, a former executive in McKinsey’s manufacturing center of competence, as director of operations.

On 20 May, Signal Hill opened a Calgary office, its second office in Canada, led by vice president Stephen Hughes, a former executive in the oil field services business.

“Expanding our presence with a dedicated office in Alberta is an important milestone in our strategic plan,” Johnson said in a statement last week.

A co-founder of Toronto-based mid-market firm Ironbridge Equity Partners, established in 2005, Johnson was also a partner at Toronto-based EdgeStone Capital Partners before founding Signal Hill in 2008. 

For investments that require additional capital, Signal Hill will offer co-investment opportunities to its limited partners, which include institutional and family offices investors. 

The Signal Hill team has completed over 50 transactions and is expected to complete one more platform acquisition before launching its Fund III.