Kinderhook Closes its Largest Fund

Kinderhook Industries has held a final closing of its sixth private equity investment fund, Kinderhook Capital Fund VI LP (along with a parallel fund, together “Fund VI”), at its hard cap with $1 billion of limited partner commitments. The new fund was oversubscribed and is the largest fund ever raised by Kinderhook.

Limited partners in the new fund include domestic and international endowments, foundations, family offices, pensions and other financial institutions. An additional $111 million of capital was committed by the general partner, operating partners and affiliates of Kinderhook.

“We received tremendous support from our longtime limited partners who have been investing with Kinderhook for over a decade and from new limited partners who embraced Kinderhook’s strategy,” said Rob Michalik, a managing director of Kinderhook. “We are very grateful for the conviction and support from the limited partner community. In particular, we would like to thank our extensive operating partner network that not only manages and supports our portfolio companies, but also made a significant capital commitment to Fund VI. Our ability to raise Fund VI is a true testament to the strength of our team, the consistency of our investment strategy and our successful track record.”

Kinderhook makes control investments in companies with transaction values of $25 million to $150 million in which the firm can achieve financial, operational and growth improvements. The firm makes investments in non-core divisions of public companies, management buyouts of entrepreneurial-owned businesses, troubled situations, and existing small-capitalization companies lacking institutional support.

“Kinderhook remains focused on the same disciplined, replicable and value-oriented approach to investing in the lower middle market; targeting the healthcare services, environmental and business services, and automotive and light manufacturing verticals. Fund VI will employ the same investment philosophy and management-focused strategy that has been the cornerstone of the firm’s success,” said Tom Tuttle, a managing director at Kinderhook.

Kinderhook was an active investor in 2019. The firm’s most recent platform investments include PharMedQuest, a Brea, California-headquartered pharmacy management company that operates 28 pharmacies across California and, under the Avita and Longs brands, operates more than 30 pharmacies in the Southeast (acquired in December 2019); Copperweld Bimetallics, the world’s largest manufacturer of bimetallic conductors and the only domestic producer of copper-clad steel and copper-clad aluminum wire. Copperweld is headquartered in Fayetteville, Tennessee (acquired in October 2019); and Capital Waste Services, a Columbia, South Carolina-headquartered regional provider of solid waste hauling services for residential, commercial and industrial waste generators (acquired in August 2019).

“We are excited to continue to invest in the lower middle market on behalf of our expanded investor base and continue our success in building dominant companies in market niches,” said Chris Michalik, a managing director at Kinderhook. “Consolidation has played an important part in our success; across our 58 portfolio companies, we have completed 169 follow-on investments. Once built, these companies have proven to be attractive targets to strategic buyers, with 26 of our 34 realizations sold to strategics.”

Evercore Group was the placement agent on this fundraise and Kirkland & Ellis provided legal services.

Kinderhook was founded in 2003 and is headquartered in New York City.

© 2020 Private Equity Professional | January 30, 2020

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