Generation Growth Capital has held a final close of its second fund, Generation Growth Capital Fund II, LP (“Fund II”). Capital commitments for Fund II significantly exceeded the $24 million of capital commitments for the firm’s first fund which closed in 2007.
Fund II investors consist primarily of insurance companies, banks, foundations, corporations and some high-net-worth individuals. Generation Growth has not reported the final amount of capital raised for Fund II, but was targeting $100 million. Of the targeted amount, $30 million came from institutional investors including Northwestern Mutual, State of Wisconsin, Helen Bader Foundation, Robert W. Baird, Wisconsin Energy Foundation, and BMOHarris Bank.
“We are quite pleased that all of our Fund I institutional investors, who still invest in private equity, made a new financial commitment to Fund II. Many of our investors had meaningful increases over their Fund I commitment amounts,” said Cory Nettles, Founder and Managing Director of Generation Growth Capital. “In spite of what remains a very difficulty fund-raising environment, we raised significant resources to support our ongoing acquisition and growth of Midwest-based small businesses.”
Generation Growth Capital invests from $1 million to $10 million in established manufacturing, service, and distribution businesses that have enterprise values of less than $30 million and sales ranging from $5 million to $50 million. Investments are primarily structured as equity but subordinated debt and warrant structures are also considered. The firm is headquartered in Milwaukee and has an additional office in Chicago (www.generationgrowth.com).
“Fund II will maintain our investment focus on Midwest-based small businesses, primarily in heavy, industrial manufacturing”, said John Reinke, Managing Director at Generation Growth Capital. “Our initial investments out of Fund II are exceeding our performance expectations, and we are aggressively pursuing other investments to close this year,” said Mr. Reinke.
In January 2012, Fund II closed on its first acquisition, Midway Industrial Supply, a value-added distributor and systems integrator of fluid handling and spray finishing equipment based near Minneapolis in Mounds View, MN (www.midwayis.com). In April, 2012, Fund II closed on its second investment, Tri Aerospace, a manufacturer of large machined components for major aerospace engine customers based in Terre Haute, IN (www.triaerospace.com).
Another aspect of the Generation Growth’s investment strategy is the creation of “double bottom line” returns. For the firm, this means investing and creating jobs in distressed communities, and, in some instances, providing capital to ethnic minority entrepreneurs to pursue investments that meet Generation Growth’s mandate. “In addition to providing competitive financial returns for our investors, we are proud that we have also been able to create jobs and improve the tax base in distressed communities”, said Mr. Reinke.
In addition, to closing Fund II, the firm has closed a companion fund, Generation Growth Capital Wisconsin Fund II Wisconsin, LP. Generation Growth has not reported the final amount of capital raised for this fund.
© 2013 PEPD • Private Equity’s Leading News Magazine • 7-24-13
