Family office Nimes Capital gobbles up Togo’s Eateries

Nimes Capital is buying Togo’s Eateries Inc, ending an eight-year investment for Mainsail Partners.

Financial terms weren’t announced, but a source said the deal is valued at less than $250 million.

Togo’s CEO Tony Gioia will retain his ownership stake and continue to lead the company, a December 15 statement said.

Founded in 1971, Togo’s sells cold and hot sandwiches. Based in Colorado Springs, the company has 251 restaurants in six western states, including Arizona, California and Colorado.

Mainsail, a San Francisco growth equity firm, acquired Togo’s in December 2007 from Dunkin’ Brands Inc. It’s unclear how much Mainsail invested.

Earlier this year, Mainsail hired Brookwood Associates to find a buyer. Private equity and family offices dominated the auction, the source said. Strategics were not involved. Mainsail picked Nimes because “it was a good fit,” the person said.

Nimes has experience in the space. In January 2013, it acquired  TD Food Group Inc, which owns Pizza Hut and Taco Bell franchises throughout Hawaii, Guam and Saipan. Nimes also owns Umami Burger.

With offices in Los Angeles and Austin, Texas, Nimes is the investment arm of Nazarian Enterprises. Younes and David Nazarian established the family office to manage the capital of the Nazarian family.

Family offices have emerged as a force in middle-market auctions, competing and beating private equity firms, Buyouts has reported. Many family offices are interested in restaurant franchises because their cash flow is stable, the source said.

The exit

Mainsail is selling its shares in Togo’s to Nimes, the statement said.

Mainsail is marketing for its fourth fund, Buyouts has reported. The firm is in the market targeting $325 million with a $375 million hard cap for Fund IV, Buyouts said.

The growth equity firm focuses on sectors such as technology-enabled business services, e-commerce and Internet, as well as franchising business models. Mainsail’s recent investments include 3PL Central, Ncontracts and SQL Sentry.

It’s unclear which fund Mainsail used to invest in Togo’s. The firm has raised three funds: Fund I collected about $33 million in 2005, Fund II raised about $110 million in 2008 and Fund III collected $216 million in 2012.

Mainsail’s first fund generated a net multiple of more than 2.5x and close to a net 30 percent IRR, while Fund II generated a 13 percent net IRR and a net 1.6x multiple, Buyouts reported. Fund III generated a net 4 to 5 percent IRR and a net 1.1x multiple, Buyouts said.

Mainsail and Nimes did not respond to requests for comment.

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