Tower Three targets $400m for Fund II

The turnaround firm’s major investment was a buyout alongside Catterton Partners in Restoration Hardware. The business filed to go public last year.

A small distressed investment shop based in Greenwich, Connecticut has come back to market, trying to raise $400 million for its second fund.

The firm, Tower Three Partners, is a small turnaround firm that completed a major investment in Restoration Hardware, the high-end residential accessories business, alongside Catterton Partners in 2008. The firms invested about $175 million in the company. Restoration filed an initial public offering last year that it has amended several times. It’s not clear how much the majority shareholders want to raise in the IPO.

Restoration
Hardware

Bill Forrest, a former managing director of Catterton-Forrest, a division of Catterton, launched Tower Three in 2007 along with Terry Harris, former chief investment officer of FirstLight Financial. David Blechman, a former executive with Sun Capital Partners, joined the firm in 2009 but has since left and joined H.I.G. Capital as a managing director.

Tower Three calls itself an operationally-focused private equity firm that makes control investments in underperforming and distressed mid-market businesses in the US. The firm tries to make investments ranging in size from $50 million to $150 million.

The firm was trying to raise $500 million for its debut fund but was able to collect only $265 million, according to a market source and a filing with the US Securities and Exchange Commission from 2008. The filing showed the firm was charging a 2 percent management fee on committed capital during the investment period, and 2 percent on committed capital after the investment period. It’s not clear how the debut fund was performing or even what percentage of the fund had been invested.