Catterton Partners Preps For Seventh Buyout Fund

Catterton Partners plans to raise its seventh fund early next year, a source familiar with the firm’s plans told Buyouts. The target is expected to range from $1.25 billion to $1.5 billion, according to the source.

The Greenwich, Conn.-based shop has invested almost 60 percent of its $1 billion sixth fund, raised in 2006, That fund was a substantial increase from its $650 million fifth fund, raised in 2003.

Investors in Catterton funds include AlpInvest Partners, Colorado Fire & Police Pension Association, and the Employees’ Retirement System of Rhode Island. LPs should be pleased with two notable recent exits: its sale of natural pet food maker Wellness Pet Foods for which Catterton earned about 7x its investment through its recent sale to the Berwind Group; the firm earned more than 4x its money when it sold luxury hair product company Frederick Fekkai & Co. for more than $400 million in April.

The firm, which manages $2 billion, has yet to hire a placement agent to help it raise the fund, and our source said the firm’s professionals will pitch the fund themselves. Catterton employs 26 investment professionals, comprising 10 partners, seven principals and nine associates.

Catterton plans to pursue the same strategy and the same size investments: it typically cuts equity checks of $30 million to $100 million for North American mid-market companies in the consumer industry. The firm focuses on food and beverages, retail and restaurants, consumer products and services, and media and marketing services. The shop has completed more than 60 investments since its inception in 1990. Recent deals include Restoration Hardware Inc., a home furnishing retailer, which it bought alongside Tower Three Partners LLC in June for about $179 million.

In March, the firm closed a $300 million growth fund for smaller deals requiring $10 million to $30 million, as first reported in Buyouts in December 2007.