Atlantic St. Capital Rides Rising Tide to Fund II

Atlantic Street Capital, the Connecticut-based, lower middle market private equity fund, held its first close today, netting about $60 million of an expected $80 million Fund II, according to an individual familiar with the situation.

The PE firm is using placement agent Ariane Capital partners and expects its second and final close to come this April, the source said.

After its first fund, which it began raising in 2006 and topped out at $35 million from what was primarily a one-LP vehicle, the follow-up fund will have a significantly expanded investor base, peHUB’s source says. Fundraising began in spring 2010, shortly after Atlantic Street exited its Fund I investment Fleetgistics in a deal that netted it a 7.7X return, the source said. Other Fund I investments include EZE Trucking and Double B Foods, according to the PE firm’s Web site.

Atlantic Street Capital’s Fund I is fully deployed, the source said, save small pockets of funding remaining to tack add-on deals to existing platforms. For Fund II, the source said, the plan will essentially remain the same: pursue lower middle market investments in industries including transportation, business services and logistics, spending $8 million to $12 million per transaction, then build upon those assets via add-on acquisitions.

As for Fund II, there have been no new investments to date despite the cash influx, the source said. However, that is expected to change by summer, and the PE firm is already pipelining potential transactions.