Exclusive: Two Chicago Growth Partners executives raise $350 mln for new venture

Two executives from Chicago Growth Partners, which decided to stop raising its third fund earlier this year, have raised more than $350 million for investments in rapidly growing companies, a person with knowledge of the plans told peHUB.

Rob Healy, a managing partner with Chicago Growth Partners, and Jeff Farrero, a principal with the firm, formed L Squared Capital Partners earlier this year. The two have raised capital from a group of ultra high net worth families, including Longview Asset Management, Bratenahl Capital and Virtu Holdings, the person said.

L Squared is focusing on “longer-term business building with longer hold periods without pressure for early liquidity,” the person said. The focus is on fewer but bigger LPs, with a closer LP-GP relationship, the person said.

The firm is now actively searching for platform investments, the person said. L Squared is focusing on growing companies in the tech-enabled services, education and industrial technology. Fortune had an earlier report on the formation of L Squared.

Other members of the L Squared team include other Chicago Growth alumni: partner Randall Hunt, formerly a vice president at Satori Capital and a former associate at Chicago Growth Partners; Sean Barrette, partner, a former principal at Chicago Growth; and Adam Kimura, a former associate at Chicago Growth.

Chicago Growth decided to stop raising its third fund earlier this year and alluded to a changed investment focus in a memo to its limited partners. The firm had brought Fund III to market last year targeting $400 million, according to a filing with the U.S. Securities and Exchange Commission, and reached halfway to its target before cutting off the process.

“After much consideration, we have decided to discontinue our fundraising efforts for CGP III and embark on a different path,” the firm said in the LP memo. “Our partners are not done investing. Rather, after CGP II is fully deployed, we simply plan to invest capital in small growth companies under a new structural arrangement that we feel is more appropriate for our business going forward,” the firm said.

Chicago Growth’s leadership team continues to manage out remaining investments. However, it’s not clear if the other Chicago Growth managing partners are pursuing their own ventures. CGP’s management team comprises Healy, Devin Mathews, David Chandler and Arda Minocherhomjee.

Chicago Growth closed its second fund on $500 million in 2008, according to a press release at the time. The firm became independent when it spun out of Chicago-based investment bank William Blair & Co in 2004.

Photo of Chicago’s Wrigley Field courtesy of Richard Cavalleri / Shutterstock.com