Golden Gate to make 3x its money with On The Border sale

ontheborder

Golden Gate Capital looks like it will be exiting On The Border Mexican Grill & Cantina after nearly four years.

The San Francisco buyout shop said Thursday it was selling On The Border to Argonne Capital Group. Argonne, which has much experience in restaurants, is partnering with Fortress Investment Group on the deal. Financial terms weren’t announced.

On The Border, which calls itself the world’s largest Mexican full-service dining chain, serves items such as fajitas, hand-rolled enchiladas and nachos. The Irving, Texas-based company operates 157 restaurants across 36 states and three countries.

Golden Gate acquired On The Border in July 2010 for $180 million in gross proceeds, according to a statement from that time. It’s unclear how much equity Golden Gate invested. The buyout shop expects to make more than 3x its investment once it closes the sale, a source told peHUB.

Golden Gate, which has more than $12 billion in committed capital under management, raises “evergreen” funds. The PE firm typically asks its LPs every four years or so if they would like to commit fresh capital, the New York Times said. In 2011, Golden Gate collected $3.5 billion for its Opportunity Fund.

Atlanta-based Argonne invests in sectors such as restaurants, retail and healthcare. In 2012 the PE firm acquired Krystal Co, which is known for its inexpensive sliders. Argonne also owns more than 350 IHOP and Applebee restaurants.

Golden Gate, once it sells On The Border, will own only one restaurant company. In 2011, the buyout shop acquired California Pizza Kitchen in a deal valued at $470 million.

John Tibe and William Cooling of Jefferies & Co advised Golden Gate on the sale.

Executives for Argonne and Golden Gate declined comment.

Photo courtesy of On The Border

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