Mountaingate Capital said Aug. 16 that it closed its first fund at its $395 million hard cap. The target of Fund 1 was $300 million. Mountaingate, of Denver, invests in lower middle market companies in four sectors: marketing services, business/industrial services, specialty distribution and specialty manufacturing, including medical devices.
DENVER–(BUSINESS WIRE)–Mountaingate Capital (“Mountaingate”), a Denver-based private equity firm employing a proven, customer-centric buy-and-build strategy that empowers lower middle market companies with strong growth potential and engaged leadership teams, today announced that it closed its first fund (“Fund I”) at its hard cap with $395 million in capital commitments. Fund I closed above its target of $300 million, was significantly oversubscribed and attracted a diverse investor base of leading institutional investors.
“We are pleased to announce the successful closing of Fund I,” said Bruce Rogers, co-founder and managing director of Mountaingate Capital. “Mountaingate was formed to invest in and build lower middle market companies through a customer-focused, organic and add-on acquisition growth strategy. We appreciate the support of our investors and look forward to providing our management partners with the resources they need to grow their businesses and achieve their vision as industry leaders.”
Focused on Building Value in Four Sectors
Fund I will continue to invest in new platform companies and support their efforts with strategic add-on acquisitions in four target sectors: marketing services, business/industrial services, specialty distribution and specialty manufacturing, including medical devices. Mountaingate’s Fund I has seen strong early momentum with three platform investments already in the portfolio. W2O Group, a San Francisco-based marketing and communications firm serving healthcare and technology clients with industry-leading proprietary analytics and insights; HS2 Solutions, a Chicago-based digital brand experience agency with expertise across leading enterprise marketing platforms; and Elite SEM, a New York-based performance driven digital marketing firm specializing in e-commerce and consumer brands. Mountaingate has already formalized strategic plans for these platforms, supported several management additions and closed three strategic add-on acquisitions.
Colton King, co-founder and managing director of Mountaingate commented, “We are delighted by the early advancement and value being created within our first three platform companies. Our partnerships with Jim Weiss of W2O Group, Phil Hollyer and Keith Schwartz of HS2 Solutions, and Ben Kirshner of Elite SEM are illustrative of the types of entrepreneurial leaders and organizations we look to invest in and support their efforts to aggressively grow and build industry-leading companies.”
“Our partnership strategy, coupled with our proven customer-centric buy-and-build approach for add-on acquisitions and side-by-side management equity ownership, has consistently created more valuable enterprises and ensures strong alignment of interests and goals,” commented Bennett Thompson, co-founder and managing director of Mountaingate.
Experienced Management Team
Mountaingate has an experienced team managing Fund I with, in the aggregate, approximately 60 years of principal buy-and-build investing experience in the lower middle market. The four Mountaingate founding managing directors have served in leadership positions together for over ten years at KRG Capital Partners (“KRG”), a private equity firm co-founded by Bruce Rogers in 1996.
“Our team has worked together for over ten years inside KRG and now at Mountaingate, honing operational best practices to provide seasoned counsel to our management partners,” said Stew Fisher, co-founder and managing director of Mountaingate. “We are committed to partnering with entrepreneurs and management teams who share our work ethic and values, seek to achieve growth and operational excellence and deliver strong returns, together.”
KRG’s final fund, Fund IV, is still being jointly managed by the Mountaingate managing directors as well as four other KRG managing directors. Fund IV has realized a series of successful exits over the past 18 months. Four out of a total of 15 platform companies remain in Fund IV and the Mountaingate team plans to continue to support these businesses through successful exits. The four other KRG managing directors are not affiliated with Mountaingate, but are each investors in Fund I on a passive basis. Fund I also received backing from a core group of legacy KRG institutional limited partners, as well as several new meaningful limited partner relationships. There are no plans for KRG to raise another fund.
Rogers remarked, “We are proud of the success we achieved at KRG across ten different market sectors and are excited to bring that heritage and experience to bear on four highly focused sectors under Mountaingate. We are very appreciative of the support we have received from the KRG partners and investors, as well as our new investors in Mountaingate’s Fund I.”
Credit Suisse Securities (USA) LLC acted as exclusive advisor and placement agent for Fund I and Kirkland & Ellis LLP served as legal counsel.
About Mountaingate Capital
Mountaingate Capital is a private equity firm based in Denver that specializes in building and empowering lower middle market companies with strong growth potential and engaged leadership teams. The firm was launched by a team of partners with deep investment expertise in four distinct market sectors: marketing services, business/industrial services, specialty distribution and specialty manufacturing, including medical devices. Mountaingate’s focus on organic growth coupled with its proven customer-centric buy-and-build approach for add-on acquisitions and shared equity ownership with management creates more value for the end customer, while forging stronger, more collaborative, and more successful investment partnerships with management teams. In 2017, Mountaingate announced the close of its first fund with $395 million in capital commitments. Mountaingate targets investments in new platform companies typically with $5 million to $25 million of EBITDA. For more information, please visit http://mountaingatecap.com/.