Toronto private equity firm Argosy Partners is seeking up to $50 million for its fourth shotgun fund, according to a news release.
Shotgun Fund IV, like its predecessors, is earmarked for purchases of equity from a private company’s selling shareholders when a shotgun clause or buy-sell agreement is executed.
This specialized financing helps owner-operators of mid-market companies resolve shareholder disputes and gain liquidity.
In the release, General Partner Richard Reid, who co-founded Argosy in 1995, said the niche market for shotgun deals remains “largely overlooked.”
Argosy’s shotgun funds have generally invested in businesses valued at $3 million to $20 million and with sales of $10 million to $100 million.
The inaugural shotgun fund raised $10 million in 1999.
Argosy said Shotgun Fund I was wound up following last month’s sale of Logistik Unicorp, a Saint-Jean-sur-Richelieu, Québec, provider of uniform solutions to corporate and public-sector organizations.
The fund invested in Logistik in 2000 to address a shareholder conflict. It stayed on to support the company’s growth.
Logistik was acquired by Wynnchurch Capital. Terms weren’t disclosed for the deal, which also saw Clearspring Capital Partners sell its stake.
Argosy said Fund I returned almost 6x its invested capital, generating an annual IRR of more than 13 percent.
The firm previously wound up Funds II and III.
A Fund II investment, Etratech Enterprises, a Burlington, Ontario, maker of advanced electronic controls and control systems, was sold in 2017 to Gentherm for US$64 million.
Partner Larry Klar, who joined Argosy in 2006, said Fund IV’s launch is so far drawing interest from family offices and business people.
Along with its shotgun funds, Argosy has overseen a series of succession funds, which provide financing for ownership transitions, shareholder realignments and partial liquidity events.