Four Denver Pros Look To Raise Debut Effort –

A group of veteran bootstrappers in Denver are raising their first buyout fund and are looking for limited partners who will play an active role in investing.

KRG Capital Partners kicked off fundraising last month for KRG Capital Fund I, setting a target of between $125 million and $150 million.

Since 1996, the group has completed 27 acquisitions, raising capital on a deal-by-deal basis. According to Dale Meyer, head of private placement at NationsBanc Montgomery Securities, the fund’s placement agent, KRG Capital has realized a 238% rate of return on its investments to date.

The firm will employ a buy-and-build strategy in the manufacturing and distribution sectors-spaces in which it has already had some success on its own. In early 1997, KRG Capital acquired White Cap Industries, a distributor of specialty contracting equipment, using $9.4 million in equity. After making 10 add-ons, the firm took White Cap public and saw its original investment appreciate to $58 million.

In the same year, the firm acquired SPI Manufacturing, a maker of modular buildings and classrooms, for $9 million in equity. The company sold to Modtech in September for a mixture of stock and cash now worth $61.6 million.

A Team with Varied Backgrounds

KRG Capital has four managing directors: Mark King, who prior to forming the firm was doing his own deals; Bruce Rogers, a former partner at the law offices of Hogan & Hartson; Charles Gwirtsman, who managed a mezzanine fund for Fiduciary Capital Management and worked as an investment banker at PaineWebber; and Christopher Lane, who has an accounting background.

Mr. Meyer said the firm already has soft-circled commitments north of $40 million, including capital from the managing directors. Bank of America, NationsBanc’s parent company, also will commit to the fund. KRG Capital is looking for L.P.s who will want to co-invest in deals. The firm is planning on completing four deals in the next six months, even if the fund has yet to close and the partners have to return to their bootstrapping roots. “Right now they have more deals than they have money,” Mr. Meyer said.