Platinum Equity has held a first and final oversubscribed close of Platinum Equity Small Cap Fund LP, the firm’s inaugural fund to target investments in the lower middle market, at the hard cap of $1.5 billion.
The new fund will focus exclusively on the North American and European lower middle market – defined by Platinum as companies with less than $450 million of revenues and $45 million of EBITDA – and will act as a complement to Platinum Equity Capital Partners IV, a $6.5 billion buyout fund which closed in March 2017 that focuses on much larger transactions.
“We have the ability to create value from one end of the spectrum to the other,” said Tom Gores, chairman and chief executive officer of Platinum Equity. “Our core fund is moving upstream into larger deals, but we don’t want to lose sight of smaller transactions where we can create real value. So it made sense for us to launch a lower middle market fund.”
According to Platinum, there are more than 650,000 companies across North America and Europe with less than $450 million of revenue. Platinum believes that levels of transaction activity are also higher in the smaller end of the market given the larger pool of buyers and sellers, which results in a deeper and more liquid marketplace. For example, approximately 96% of leveraged buy-outs completed across North America and Europe since the beginning of 2012 were in companies with less than $450 million of revenue.
Our roots in the lower middle market run deep
and we have maintained a strong presence there.
Platinum’s small cap fund will pursue the same type of operations-focused investments as the larger fund. The firm invests in a range of industries including manufacturing, distribution, transportation and logistics, equipment rental, metals services, media and entertainment, technology, and telecommunications. Platinum’s investment portfolio includes both equity and credit investments and the firm specializes in complex carve-outs from Fortune 500 companies; public to private transitions; and acquisitions from a variety of private sellers. Platinum has completed more than 200 acquisitions since its founding in 1995.
“The successful closing of this new fund reflects a high degree of investor confidence in Platinum Equity,” said Mr. Gores. “We are grateful for that and mindful of the importance to execute well and deliver good returns on their behalf. Our roots in the lower middle market run deep and we have maintained a strong presence there.” Platinum Equity, founded by Mr. Gores in 1995, funded its initial investments with founders’ capital. The firm raised its first private equity fund in 2004, with $700 million in capital commitments. That was followed by Fund II with $2.75 billion in 2007, Fund III with $3.75 billion in 2012, and Fund IV with $6.5 billion.
Platinum Equity is based in Beverly Hills with additional offices in New York and London (www.platinumequity.com).
Simpson Thacher & Bartlett (www.stblaw.com) provided legal services to Platinum on this fundraise.
A copy of the Platinum Equity Small Cap Fund public investment memorandum for the Pennsylvania Public School Retirement System can be viewed HERE.
© 2018 Private Equity Professional | July 13, 2018