Blue Sage Closes Fund III, Two Platforms Acquired

Blue Sage Capital has held a final, oversubscribed, and above target closing of its third fund, Blue Sage Capital III LP, with capital of $300 million. Blue Sage’s earlier fund closed in December 2012 with $150 million of capital.

The new fund was raised with commitments from existing investors as well as new limited partners including university endowments, charitable foundations, pension funds, financial institutions, and family offices.

Austin-based Blue Sage was founded in 2002 and is led by founding members – Peter Huff and Jim McBride – along with two additional partners – Jonathan Pearce and Eric Weiner. The firm’s additional staff includes six investment professionals and three administrative professionals.

“Blue Sage is fortunate to have attracted such a strong team that has worked together to consistently produce outstanding returns for our investors over many years,” said Mr. Huff. “We are extremely appreciative of the robust support provided to us by our limited partners during these trying times.”

Blue Sage specializes in growth, recapitalization, and buyout financings of $10 million to $40 million in smaller middle-market companies with $10 million to $100 million of revenue and $4 million to $15 million of cash flow.

Blue Sage has closed on two platforms for Fund III with the buys of Barricades Unlimited, a Texas-based provider of traffic safety and control products including lane markers, barricades, message boards, work zone signs, and road construction work apparel, in June 2020; and All-State Industries, an Iowa-based manufacturer of non-metallic sealing, acoustics, and thermal management components used by original equipment manufacturers across a range of end markets, in February 2019.

Blue Sage’s first fund – raised in 2006 – invested in thirteen companies across its targeted industry verticals – environmental solutions, niche manufacturing, and specialty services. This fund realized a net multiple on all investments of approximately 4x invested capital.

The firm’s second fund – raised in 2012 – has made investments in nine platform businesses and has exited two with the sales of Cobalt Environmental Solutions, an Oklahoma-based provider of flowback and wastewater services to the oil and gas industry (acquired in April 2014 and exited in May 2019); and Marine Accessories, a Tennessee-based manufacturer, distributor and aftermarket supplier of cockpit covers, bimini tops, and boat covers that are sold to OEMs, dealers, retailers and distributors, as well as direct to consumers (acquired in July 2015 and exited in June 2018).

Kirkland & Ellis provided legal services to support the raising of Fund III.

Private Equity Professional | September 22, 2020

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