New York-based Wellspring Capital Management amassed $1 billion (€850 million) in limited partner commitments for its latest fund, Wellspring Capital Partners IV.
The fund primarily targeted existing limited partners, although 30 percent of the committed capital came from new investors. Limited partners in past Wellspring funds include Harvard Management Co., The Oregon Public Employees’ Retirement Fund, The Ontario Teachers’ Pension Plan, The State of Connecticut and Julius Baer’s public fund-of-funds shaPE Capital, among others.
The $1 billion close represents a significant increase over previous Wellspring funds. The new vehicle’s predecessor closed in April 2003 with $675 million of capital.
The new, larger fund size will not mean a change in focus for Wellspring, which has traditionally targeted the mid market. Greg Feldman, a co-founder of Wellspring, confirmed in a statement that even as “competition has intensified considerably”, he anticipates that the firm will maintain its track record in the middle market.
Wellspring, on its Web site, describes that a typical target company will have revenues of at least $50 million and an enterprise value in excess of $75 million. The firm essentially characterises itself as a generalist group, although specifies that it does not participate in deals in the telecom, high technology, real estate or commodity sectors.
Wellspring isn’t necessarily a turnaround group, but it does have a distinct operations focus. It is perhaps best known in Canada for revitalizing the CCM, Jofa and Koho hockey brands through its investment in The Hockey Company and among the firm’s first deals was its purchase of run-down model train maker Lionel, a deal included rock icon Neil Young as a co-investor. (Lionel went through a bankruptcy last year, although Wellspring is still a control investor in the company.)
Investments out of Wellspring’s previous fund include the acquisition of The Stanley Works’ closet-door unit Home Décor and the buyout of steel services outfit Tube City Holdings. Wellspring, earlier this month, inked what could be the last deal for Fund III, buying Texas convenience store operator Susser Holdings.
The firm has also notched some realisations, unloading American Coin Merchandising through a sale to Coinstar in 2004, an exit that yielded a 2.5x return on equity, and this past September Wellspring announced the $350 million sale of JW Aluminum to Superior Plus.
Wellspring is headed by EXOR America vet Greg Feldman and David Mariano, a former Blackstone Group managing director. Feldman helped launch the firm in 1995 with former Gulf & Western CEO Martin Davis, who passed away four years after the firm’s launch. Mariano, meanwhile, joined Wellspring in 1997.
Credit Suisse First Boston served as placement agent for the fundraising.