MiddleGround Capital has closed its first fund, MiddleGround Capital I LP, at its hard cap of $459.5 million.
Archean Capital Partners, a joint venture between multi-family office Veritable and alternative asset manager Moelis, is MiddleGround’s anchor investor and has committed $75 million to the firm through Archean Capital Partners’ Master Fund II LP. Archean provides initial investment capital, advice and infrastructure to private equity professionals looking to launch new, independent firms.
MiddleGround Capital was formed in May of 2018 by ex-Monomoy Capital professionals John Stewart, Lauren Mulholland and Scot Duncan.
“We knew right away there was something special about the MiddleGround team,” said Rob Lazaroff, a partner at Archean. “We spoke to over forty references including former CEO’s, CFO’s and investors that previously worked with the team and we were impressed with the consistency of the level of respect they had for the MiddleGround team.”
“When we initially formed MiddleGround, we didn’t have any preconceived notions about whether or not to bring on an anchor investor,” said Ms. Mulholland. “Today, after closing our first fund in nine months, we can point to the continuous support of the Archean team as a key factor in our success.”
MiddleGround used Credit Suisse’s private fund group as the placement agent for this fundraise. “Credit Suisse and Archean were perfect partners for us as we embarked on this endeavor,” said Mr. Stewart. “In addition to all the success we’ve had with the fundraise and the three deals we’ve completed along the way, we couldn’t be prouder and more excited about the team we’ve built. Eight of us have previously worked together at multiple firms and this high level of continuity has given us a lot of confidence in our strategy. We have now built the team out to twenty-one professionals with diverse backgrounds and expertise.”
MiddleGround makes control equity investments from $25 million to $65 million in North American-based business-to-business companies in the industrial and specialty distribution sectors that have enterprise values of up to $200 million. So far, the firm has invested over $150 million of equity capital in three platform investments within its first twelve months.
The firm acquired Alco Manufacturing, a Elyria, OH-based maker of steel, aluminum, and brass connectors used in industrial and consumer applications (July 2018); Peterson Spring, a Southfield, MI-based maker of springs and wire forms for automotive OEMs, motorsport/racing and industrial companies (April 2019); and Steel Craft, a Hartford, WI-based provider of outsourced manufacturing services including fabrication, welding, stamping and coating (May 2019).
“We are really excited to have the fund closed so that we can focus all of our energy on the portfolio,” said Mr. Duncan. “We look forward to the future and are honored by the investors who have invested in Fund I.”
MiddleGround Capital is headquartered in Lexington, KY with an additional office in New York.
© 2019 Private Equity Professional | September 6, 2019