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Falfurrias Capital to deploy Fund III while fundraising

  • Firm reaches letter of intent on first Fund III deal
  • Charlotte, NC, firm makes last investment out of Fund II
  • Falfurrias Capital bought 55 percent of Green Distribution

Falfurrias Capital Partners soon will begin deploying its third buyout fund while also staying in fundraising mode for the pool, an executive at the firm said.

Ed McMahan, partner at Falfurrias, declined to comment on fundraising but said the firm is nearing its first acquisition from Fund III.

“We do have our first deal under” a letter of intent, McMahan told Buyouts in a phone call. He declined to elaborate since the firm has yet to formally announce the transaction.

The firm disclosed a fundraising target of $225 million for Falfurrias Capital Partners III LP, with commitments of $93.4 million, or about a third of the goal, a March 23 filing shows. Shannon Advisors is placement agent on the fundraise.

With co-investment dollars from LPs, the firm’s average equity payment in Fund II ranged from $15 million to $25 million. Fund III deals could be larger than that, McMahan said.

“As we grow, we may have more companies in Fund III and a higher average check size,” he said.

Falfurrias Capital just tapped the last funds from Falfurrias Capital Partners II LP when it bought into Green Distribution, the Secaucus, New Jersey, provider of manufacturing and distribution of heat- and screen-printed custom apparel to Harley-Davidson, Nike and other customers. Terms weren’t disclosed. Falfurrias bought 55 percent and Robert Butters, CEO of Green Distribution, holds the rest.

Fund II, which closed on $126.3 million in commitments in 2013, now holds five portfolio companies. The firm has no immediate plans to sell them. “They’re at different levels of maturity,” McMahan said. “We’re 12-plus months away from our next exit.”

On the exit front, Falfurrias Capital sold its last Fund I company, Dorsey, Wright & Associates, early in 2015, to Nasdaq for $225 million.

Falfurrias Capital, Charlotte, North Carolina, looks to work with families and entrepreneurs in the industrial, tech-enabled software and services and consumer sectors. It generally pays 5x or 6x EBITDA for companies on the low end and up to about 10x EBITDA.

Action Item: Reach Falfurrias: www.falfurriascapital.com/contact-us

Photo courtesy of ©iStock/PeteMuller