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Pfingsten closes fourth fund with commitments of USD525m

Private equity firm Pfingsten Partners has closed its fourth investment fund, Pfingsten Partners Fund IV, with capital commitments of USD525m.

Private equity firm Pfingsten Partners has closed its fourth investment fund, Pfingsten Partners Fund IV, with capital commitments of USD525m. The firm invests in middle-market manufacturing, distribution and business service companies and says it eschews financial engineering for operational improvements and other value-adding approaches at its portfolio companies.

The fund, which had a target of USD400m, was significantly oversubscribed. ‘We believe consistent adherence to our investment criteria, a strong operational approach to building value, global capabilities and conservative capital structures are responsible for Pfingsten’s success to date,’ says founder and senior managing director Thomas S. Bagley. ‘We plan to use the same formula to build value in Fund IV.’

The investor base for Fund IV comprises principally institutional investors (83 per cent), with the rest of the capital subscribed by high net worth individuals and families and Pfingsten professionals. Approximately 20 per cent of capital commitments came from overseas investors.

Pfingsten Partners plans to build a diversified portfolio of around 20 platform investments in the fund, with transaction values between USD15m and USD100m. Although Fund IV is largest in the firm’s 19-year history, the firm says it will not target larger acquisitions than in the past.

‘The value we bring to middle market companies lies in our ability to take a company from its entrepreneurial roots to a professionally managed business,’ says senior managing director James J. Norton. ‘Sticking to the lower end of the middle market enables us to build better businesses and maximise returns for our investors.’

Pfingsten Partners regards the current environment as an opportune time to invest capital. ‘We finance the acquisition of every platform company with at least 50 per cent equity, which enables us to complete transactions, even in today’s tight credit markets,’ says senior managing director John H. Underwood. ‘We are in an excellent position to round out Fund III and activate Fund IV.’

Founded in 1989, Pfingsten Partners has headquarters in Chicago and an office in Hong Kong. Since completing its first investment in 1991, the firm has acquired 59 manufacturing, distribution and business service companies.

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