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GP Profile: Small Juggernaut attracts big interest

  • Year founded: 2009
  • Investment strategy: Buyouts
  • Key executives: John Shulman
  • Location: Chevy Chase, Md.
  • AUM: $260 mln (capital committed) 
  • Fundraising status: Raising Fund III
  • Active portfolio companies: 8 (listed) 
  • Website: http://www.juggernautcap.com/

So when Los Angeles County committed the lesser of $100 million or 35 percent of total fund commitments to small-market buyout fund Juggernaut Capital Partners III at its Jan. 14 meeting, the industry took notice. The retirement system’s commitment will go a long way toward Juggernaut Capital Partners’ $350 million target. The firm plans to hold a final close early this year, according to a Los Angeles County investment memo.

Despite Juggernaut’s small size – it raised just $260 million across its first two funds – Los Angeles County had good reason to place such a large bet on the firm. Through June 30, Juggernaut’s $42 million debut fund had netted a 59.8 percent IRR and 2.7x multiple. Fund II, a $218 million 2012 vintage that counts Los Angeles County among its LPs, netted an IRR of 8.1 percent as of the same date.

Based in Chevy Chase, Md., Juggernaut will likely invest Fund III in consumer products and business services companies, much like its first two funds, according to the investment memo. The memo also indicates that the firm was actively reviewing investments that would require $150 million of capital as of early January.

“Juggernaut distinguishes itself from the other small buyout fund managers in the portfolio in terms of industry focus,” according to the memo, written by Chief Investment Officer David Kushner. “Juggernaut has an experienced and well-regarded investment team, an attractive investment strategy, and is a good fit as it increases exposure to small buyout funds within LACERA’s private equity portfolio.”

Juggernaut declined to comment.

Firm origins

John Shulman founded Juggernaut in 2009, shortly after leaving Allied Capital Corp, where he led a team that managed 10 private equity portfolio investments.

The global financial crisis forced Allied to sell off many of its private equity and private debt holdings in 2009. Shulman launched Juggernaut’s debut fund later that year with the backing of Goldman Sachs as the fund’s sole limited partner.

“I resigned in late January, early February 2009 with the idea that I would try to raise some capital and acquire some companies at valuations that were now very, very depressed,” Shulman told The Washington Post in 2010. Allied’s predicament allowed Shulman to put money to work quickly. Juggernaut acquired four of the portfolio companies he had overseen at Allied before the end of the year.

“Allied was in a position that it needed to raise capital, and these were assets that I knew, so I was in a position to move much more quickly than anybody else,” Shulman told the Post.

Amerex Group was one of those investments. Although details about Juggernaut’s acquisition of the clothing company were unavailable, Allied Capital reported a $7.7 million dividend from the company’s sale in 2009 in an SEC filing. Juggernaut still owns a stake in Amerex, according to its website.

“I think they’re great to work with, and I’ve worked with them for a long time,” said Ira Ganger, president and chief executive officer of Amerex. “John (Shulman) is a smart guy. Honest, upright, always there when you need him.”

Post-crisis growth

Shortly after Juggernaut acquired the Allied portfolio, Shulman hired former Allied colleagues Craig Hille, Kevin Kuntz and Benton Lee. The firm invested the remainder of Fund I and launched Juggernaut Capital Partners II in 2012.

While Goldman Sachs provided the firm with its initial backing, Fund II managed to collect $218.1 million across 13 limited partners, including Los Angeles County. As of June 30, Juggernaut had invested $121.9 million across 11 platform investments through its first two funds.

In 2011, Juggernaut provided $18 million of growth funding to Voss Water, a popular Norway-based bottled water company that sells into 47 countries. That investment is valued at 1.8x gross, with a gross IRR of 49.6 percent as of June 30. Voss’ annual sales have grown an average of 28 percent since 2012.

As Juggernaut’s portfolio expanded, so did its roster. Another former Allied executive, Alex Deegan, joined the firm from NGP Energy Technology Partners last year. The firm also boosted its operating capabilities in December with the hiring of Charles Dieveney, formerly of Allied and the former chief operating partner of JMI Equity. Dieveney will work on firm operations and deal execution, and also develop value creation strategies for Juggernaut’s portfolio companies.