Keystone Capital Closes Debut Institutional Fund

Keystone Capital has held a first and final close of its debut institutional fund, Keystone Capital Fund II LP, with $420 million of capital commitments.

Chicago-headquartered Keystone was founded in 1994 by Kent Dauten and Scott Gwilliam to launch Record Masters as a platform in the health records management sector. In early 1995, Record Masters acquired four health records companies in Philadelphia, Detroit, New Orleans and Pittsburgh. Several acquisitions and new facilities were added to the platform and Record Masters was merged with publicly traded Iron Mountain in 1997.

Keystone has historically operated as a holding company, utilizing the personal capital of its partners to acquire businesses. Since its founding, Keystone has completed over 110 acquisitions across a range of sectors including engineering & technical services; technology-enabled services; commercial services, engineered products, and food & beverage manufacturing. Keystone’s typical acquisitions have EBITDA of $3 million to $15 million.

“The decision to raise outside capital was a natural step in our evolution and we have been truly humbled by the support we have received from our new investors,” said Kent Dauten, the chairman of Keystone. “We are thrilled to be partnering with such a reputable group of like-minded investors who support our long-term, patient capital strategy.”

Fund II already has two platforms with recent investments in ClearWater Solutions, an Auburn, Alabama-headquartered provider of outsourced operations and maintenance services to municipal water and wastewater treatment facilities (March 2021); and Inspire11, a Chicago-headquartered provider of digital strategy and transformation consulting services (January 2021).

In line with its history of investing personal capital and its commitment to the alignment of interests across all stakeholders, the principals of Keystone are collectively the largest single investor in Fund II.

“We are incredibly excited about the future of Keystone,” said Scott Gwilliam, the managing partner of Keystone. “With Fund II, we look forward to continuing our approach of providing operational and growth-oriented support to business owners and management teams, while also serving as a thoughtful, diligent steward of third-party capital.”

Kirkland & Ellis provided legal services to Keystone on this fundraise.

© 2021 Private Equity Professional | June 4, 2021

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