Warren Equity Partners has closed its second fund at its $310 million hard cap. The new fund is composed of Warren Equity Partners Fund II LP and Warren Equity Partners Fund II-A LP (together WEP II).
WEP II, which had an original target of $225 million, held its first close in March 2018 and concluded marketing to new investors in September 2018. The final close was held in December 2018. WEP II investors include both new and returning investors such as university endowments, pension funds, fund of funds, private foundations and family offices.
Warren Equity invests from $5 million to $40 million in North American-based companies that have from $3 million to $15 million of EBITDA and total enterprise value of less than $150 million. Sectors of interest include industrial, infrastructure, and business services. The firm was founded in mid-2015 by Steven Wacaster, Scott Bruckmann, and Henrik Dahlback and is based in Jacksonville Beach, FL (www.warrenequity.com).
“We are grateful for the strong support we received from our investor base during the raise of WEP II,” said Mr. Wacaster. “Our experienced team and ability to execute on a focused investment strategy attracted a diverse group of high-quality investors. We look forward to continuing our partnerships with management teams to build great companies in WEP II.”
Warren Equity believes its targeted sectors will continue to perform well over the next decade and beyond due to years of underinvestment in infrastructure; an aging asset base in the utility and building environment; continued growth in the utilization of core assets (utility distribution systems, airports, highways, and ports); growing investments in energy/electrical production and transportation; and increasing technology utilization and data management.
“We have built a strong reputation for being a value-added partner to management teams of lower middle market companies,” said Mr. Bruckmann. “WEP II will continue to invest in businesses where we have an inherent understanding of the underlying markets served and can leverage our experience and resources to drive value for our investors and portfolio companies.”
Warren Equity targets regional companies in fragmented end markets that have competitive differentiation and can scale through a combination of organic growth and add-on acquisitions. In addition, the firm utilizes an in-house operational team to drive improvements and prepare companies for growth.
“At Warren Equity, we leverage our network of industry advisors to identify attractive targets and utilize our in-house operations team to establish strategic goals and performance metrics at our portfolio companies,” said Mr. Dahlback.
So far, Warren Equity has completed four platform investments for WEP II that account for over one-third of the fund’s committed capital: Magneto & Diesel Injector Service (DBA M&D Distributors), a Humble, TX-based aftermarket distributor of parts and components for maintaining and repairing diesel-powered engines (January 2019); Meridian Waste, a Greensboro, GA-based non-hazardous provider of solid waste collection, transfer, recycling, and disposal services (April 2018); Superior Industrial Maintenance Company (SIMCO), a Concord, NC-based provider of corrosion protection services (May 2018); and StormTrap, a Romeoville, IL-based designer and engineer of stormwater management systems (December 2018).
Since founding in mid-2018, Warren Equity has completed a total of 19 transactions including 8 platform companies.
Eaton Partners, a subsidiary of Stifel Financial (NYSE: SF), was the placement agent for WEP II. “With average purchase price multiples in buyout pushing record levels, Warren Equity’s disciplined investment strategy with a focus on organic growth and operational value creation was in high demand from institutional investors,” said Peter Martenson, a partner at Eaton. “It has been our pleasure to partner with the Warren team on a successful fundraise.” Over the past two years, Eaton has successfully closed 26 funds, totaling $22 billion in capital commitments (www.eaton-partners.com).
Kirkland & Ellis (www.kirkland.com) provided legal services to Warren Equity on this fundraise.
© 2019 Private Equity Professional | January 16, 2019