Siguler Guff has held a final closing of its latest fund, Small Buyout Opportunities Fund IV LP (Fund IV), at the oversubscribed hard cap of just over $1.57 billion.
Fundraising for the new fund began six months ago and exceeded its $1.25 billion target. More than 90% of the fund’s limited partners from its earlier fund, which closed in October 2017 at $1.1 billion, re-upped and invested in Fund IV.
Siguler Guff believes that the small and lower middle market offers inefficiencies and a variety of appealing characteristics, including substantial deal flow, less competitive transactions, lower purchase multiples, low leverage and significant value creation potential. According to the firm, with approximately 350,000 small and lower middle market businesses in the US, this market segment exhibits one of the greatest structural inefficiencies within domestic private equity, as the opportunity set attracted only 10% of total US buyout capital raised in the last five years.
“We are pleased to have received such strong support from our limited partners for Fund IV and look forward to the continued success of our small business platform. It is an exciting time for smaller companies in the US economy, and Siguler Guff is optimally positioned to support their growth and strategic expansion,” said Drew Guff, managing director and founding partner of Siguler Guff. Since the launch of its lower middle market strategy in 2006, Siguler Guff has committed over $4 billion to approximately 650 companies.
The new fund, like earlier funds, invests in the US lower middle market in two ways. First as both a limited partner and a co-investment partner with private equity sponsors; and second as a direct investor in companies – typically family-owned, founder-owned and/or owner-operated – that have less than $100 million of revenue, $2 million to $15 million of EBITDA, and consistently high profit margins.
“We have built a talented team that has worked together for many years,” said Kevin Kester, managing director and portfolio manager of Fund IV, and the head of Siguler Guff’s small business investment unit. “This team has collectively developed a market-leading position within small and lower middle-market private equity that generates superior partnerships and investment opportunities. As such, we have already made several compelling Fund IV investments and identified several exciting opportunities that align squarely with our proven small buyout investment strategy. We look forward to continuing to create significant value for our investors and, importantly, the great business leaders and companies with which we partner.”
Siguler Guff is a multi-strategy private equity firm with over $14 billion of assets under management. The firm’s investment strategies include small business, opportunistic credit, distressed real estate and emerging markets. Founded in 1991 within PaineWebber, Siguler Guff became an independent firm in 1995. The firm currently serves over 600 institutional clients, including corporate and public employee benefit plans, endowments, foundations, government agencies and financial institutions, and more than 900 family office and high net worth investors.
Siguler Guff is headquartered in New York with additional offices in Boston, London, Moscow, Mumbai, São Paulo, Shanghai, Seoul, Tokyo, Hong Kong and Houston.
© 2020 Private Equity Professional | January 15, 2020