CenterOak hits hard cap on first fund after Brazos spin-out

  • Several on CenterOak team came from Brazos PE Partners
  • Dallas-based Brazos chose to wind down in 2014
  • Brazos Fund III still has four companies left

CenterOak Partners may have just closed its debut fund at its $420 million hard cap, but the Dallas firm shouldn’t be considered a rookie, said Managing Partner Randall Fojtasek.

Much of the CenterOak team — including partners Michael Salim, Lucas Cutler, Jason Sutherland and William Henry — hail from Brazos Private Equity Partners, Fojtasek said. About one-third, or 30 percent, of CenterOak’s capital comes from Brazos’s investors, he said.

“Technically, we’re a first-time fund but in the eyes of our LP base, which includes endowments and foundations, they saw it as the ability to invest in a team that had a strong track record and lots of stability and history,” Fojtasek said.

CenterOak started fundraising more than a year ago, and it surpassed its $350 million target in the first quarter, Fojtasek said. The firm completed marketing for CenterOak Fund I in late July, he said. Credit Suisse was the placement agent.

A middle-market firm, CenterOak seeks to invest $20 million to $90 million in businesses that have enterprise values of $50 million to $250 million. CenterOak acquired a majority of Cascade Windows Inc in February.

In March 2014, Brazos surprised the private equity industry when it decided to wind down, Buyouts reported. No reason was given. The firm, which had been together for 15 years, chose not to raise a fourth fund, Buyouts said.

Fojtasek, who co-founded Brazos in 1999 and was co-CEO, said the teams had different areas of interest. His team focused on industrial growth, consumer and business services, while others at Brazos invested in financial services, healthcare and food.

The partners, he said, all had great relationships. “People felt they wanted to do other things,” said Fojtasek, who is 53.

Bravos raised three funds. Fund I is a 2000 vintage vehicle that raised $250 million. Fund II collected $400 million in 2005 while the third pool closed in 2008 with $714 million.

In June, Brazos sold Ennis-Flint, a highway-paint specialist, to Olympus Partners in a deal valued at about $1 billion. Fojtasek managed the deal. Ennis-Flint was a Brazos Fund II and III investment, he said.

No companies remain in Fund II, Fojtasek said. The third pool has four companies left, including Blackhawk Industrial, European Wax Center, Winebow and NBS Inc. CenterOak is responsible only for Blackhawk, Fojtasek said. “My former Brazos partners are handling the other companies,” he said.

Asked whether Brazos LPs were upset by the firm’s dissolution, Fojtasek said: “We had a well articulated plan to effectively manage the remaining assets in Brazos. The plan was laid out with our LPs and we followed it successfully.”

Action Item: Contact CenterOak: info@centeroakpartners.com

The skyline of Dallas is lit up in blue, the traditional color of police uniforms, following the multiple police shootings in Dallas on July 10, 2016. Photo courtesy Reuters/Carlo Allegri