Milestone Partners Nears Close On Fund III

Milestone Partners is set to close its third buyout fund sometime in September or October, a source familiar with the fundraising effort told Buyouts.

The St. Davids, Pa.-based lower mid-market buyout shop had targeted $200 million but will likely close the fund closer to its hard-cap of $240 million, our source said. The firm recently held a third-closing at $174 million.

Milestone Partners III LP will be a hefty increase following the firm’s second fund, a $120 million vehicle raised in 2005. Though considered the firm’s third fund, the latest effort is its second pool funded by institutional investors, including the Pennsylvania Public School Employees Retirement System and Parish Capital Advisors.

Milestone did not employ placement agent to help it raise the fund, which charges standard “2 and 20” management fees.

The firm invests between $5 million and $25 million in deals valued between $15 million and $100 million. It prefers companies with a three-year track record of profitability, with enterprise values between $10 million and $100 million, revenues between $10 million and $100 million, and EBITDA between $3 million and $15 million.

Sectors of interest include manufacturing, distribution, natural and organic products, and service sectors. Milestone typically holds companies between four and seven years.

The firm has been on a bit of tear this year, even as many other firms have curtailed deal-making given the credit crunch and market conditions. It’s made five investments, including three out of fund III in June: Safemark Systems LP, an Orlando-based company that provides in-room safes and locking systems to hotels; Café Enterprises Inc., a Taylors, S.C. based owner of a restaurant chain in the Carolinas, Tennessee, Georgia and Virginia; and Global Connection Inc., an Atlanta, Ga.-based company that provides pre-paid telephone services.

Read more:

Milestone Nears $200M On Its Third Fund

Milestone Raising Third Fund