Parthenon Capital Closes Debut Effort, Two Deals –

Parthenon Capital on June 30 held a final closing on its debut private equity fund, rounding up a total of $350 million-the fund’s cap.

In addition, the Boston firm closed its first two deals in June-putting $30 million in equity into a staffing company and $15 million into a children’s clothing company.

Demand among investors to get into Parthenon Capital’s fund was so great that the firm had to ask L.P.s to scale back their commitments, in some cases to $25 million from $50 million, according to Ernest Jacquet, a managing partner at the Boston-based firm. “These were high-class problems,” Mr. Jacquet said.

The fund launched in May 1998, with a target of $250 million and held a first close on $257 million in February (BUYOUTS Feb. 8, p. 7).

Mr. Jacquet said the roster of L.P.s includes a mix of state and corporate pensions, funds-of-funds, endowments and banks, among them General Mills Inc., General Motors Corp., Mobil Corp., Shell Oil Co., BancBoston, Bank of America, Chase Manhattan Corp., Duke Endowment, Wellcome Trust, Oregon State Treasury, Michigan State Treasury, Rhode Island State Treasury, Corning Inc., Pacific Corporate Group and HarborVest Partners. A number of Fortune 500 chief executive officers also committed to the fund.

Off and Running with Recaps

Parthenon Capital’s investment strategy includes providing business consulting from The Parthenon Group to the companies in which the firm has made an investment. Mr. Jacquet said his firm’s first two transactions follow that plan-Parthenon Group will help one company expand overseas and assist the other in brand strategy.

Last month, Parthenon Capital sponsored a recapitalization of Creditek, a Parsippany, New Jersey-based company that provides personnel to accounts receivable departments. Creditek specializes in resolving business-to-business billing disputes. The company’s clients include Xerox Corp., Gillette Co. and Polaroid Co.

Parthenon Group, with offices in London, will help Creditek expand its operations into Europe, Mr. Jacquet said.

Parthenon Capital last month also led the racapitalization of Franco Apparel Group, a manufacturer of sports team-branded clothing for infants and toddlers. Parthenon Group brought together a group of investors to help Franco make its first add-on-the acquisition of Starter Corp., a bankrupt sportswear manufacturer. The consortium includes strategic buyers Logo Athletic, Outerstuff and Shottenstein Stores Corp., based in Indianapolis, Ind., New York, and Columbus, Ohio, respectively. Provisions of the deal, which has a total value of $46 million, provide Franco with the licensing rights to the Starter brand.

Franco this month also became a licensee for the Adidas Corp. brand-the sportswear manufacturer’s president and chief executive officer, Robert Dreyfus, sits on Parthenon Group’s advisory board.

Parthenon Capital was formed in 1998 by Mr. Jacquet and John Rutherford, a co-founder of Parthenon Group, to make conservatively-leveraged investments in middle-market companies. Mr. Jacquet earned his private equity credentials at Summit Partners, the Boston firm where, in 1990, he founded a buyout division.

Mr. Rutherford said the Parthenon Capital likely will raise a mezzanine fund to invest in Parthenon deals.