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High Road Capital closes Fund II at $320 mln hard cap

Firm: High Road Capital Partners

Fund: High Road Capital Partners Fund II LP

Target: $200 million

Amount Raised: $320 million

Placement Agent: None

High Road Capital announced that it had closed High Road Capital Partners Fund II LP at its $320 million hard cap, well above its $200 million target and more than twice the size of its predecessor fund. The firm’s inaugural fund, which also reportedly had a $200 million target, closed at $153 million in 2008.

Bob Fitzsimmons, co-founder and managing partner of High Road Capital, told Buyouts that the new fund attracted more than 25 institutional investors, family offices and high-net-worth individuals. A majority of Fund I investors returned, and the firm landed commitments from some new ones as well, he said.

Known investors in High Road Capital include Fire and Police Pension Association of Colorado and the New York State Office of the State Comptroller, according to the Thomson One private equity database.

The firm, co-founded in 2007 by Fitzsimmons, who had been a managing partner at Riverside, William C. Connell and Jeffrey M. Goodrich, who both had been vice presidents with the Cleveland-based shop, pursues a similar investing strategy, seeking what Fitzsimmons called “little niche leaders” in the United States and Canada, typically with $10 million to $100 million of revenue and EBITDA of $3 million to $10 million.

The firm styles itself as a generalist, eschewing industry specialization.

“For us it is a size play rather than an industry play,” Fitzsimmons said. “If you buy a company with less than $10 million of EBITDA, you can typically buy it for a lower EBITDA multiple. If you can successfully grow it to more than $10 million of EBITDA, you can typically sell it for a higher multiple than you paid.”

Deal flow in the lower mid-market is also less volatile both in terms of transaction volume and transaction multiples, Fitzsimmons said. “At this end of the market, you can more consistently find and capitalize on opportunities.”

A majority of the firm’s targets are entrepreneurial businesses in the first or second generation, he said. “Those companies often have gone as far as the family cares to take them, and they need help getting to the next level.”

The firm, which lists three operating partners on its website in addition to the trio of investing pros, seeks to grow its portfolio companies both through operational improvements and add-on deals, Fitzsimmons said.

“At the end of the day, hopefully we’re selling a business that is not only bigger but qualitatively better.”

The firm did not use a placement agent to raise Fund II.