Penfund V to close in coming weeks above $525 mln target

  • Penfund targets C$525 mln for Fund V
  • Expected to close above target this summer
  • Park Hill helped raise fund

Canadian private debt and equity investor Penfund has banked the C$525 million target set for its fifth mid-market fund and is now raising additional capital for a final close, a person with knowledge of the matter told Buyouts.

Penfund Capital Fund V is expected to wrap up appreciably above its target in July or August, the source said.

At its current total, the fund is already the largest in Toronto-based Penfund’s 37-year history, surpassing by 14 percent the C$460 million secured by its predecessor in March 2012.

Penfund’s fundraising overcame a major hurdle early on when a key limited partner elected not to reinvest.

HOOPP Capital Partners, the PE arm of the C$63.9-billion Healthcare of Ontario Pension Plan, previously accounted for roughly half of Penfund Capital Fund IV. But it declined to commit to Penfund’s latest offering, the source said.

Jim Walker, managing partner of HOOPP, told Buyouts that the decision reflected the pension system’s strategy to shift more assets to direct second-lien and mezzanine opportunities.

Penfund compensated by raising larger commitments from its other existing Canadian institutional LPs, most of them pension funds, and signing on a number of new investors from Canada, the United States and Asia.

The firm was assisted in its global fundraising by placement agent Park Hill Group.

Penfund declined to comment for this story.

Penfund provides junior capital to mid-market companies in a range of North American industries. It has already begun investing the proceeds of Fund V, putting C$200 million to work in five deals so far, the source said.

The firm announced several new deals earlier this year. They included a $47 million second-lien-debt and equity investment in Forefront Dermatology, a Manitowoc, Wisconsin provider of services to U.S. dermatology clinics. The investment was made in support of the company’s acquisition by OMERS Private Equity.

Penfund also topped up a second-lien credit facility for GoodLife Fitness Centres to C$90 million. Penfund has been a strong backer of the Canadian fitness chain since 2004, providing or arranging for C$330 million of debt financing in six separate transactions.

Penfund is led by partners John Bradlow, Richard Bradlow, Adam Breslin and Jeremy Thompson. Founded in 1979, it is one of Canada’s oldest private equity firms, investing more than C$2.8 billion in more than 230 companies.

Action Item: Reach Partner John Bradlow here: 416-645-3799

Photo: The moon rises over the Toronto city skyline as seen from Milton, Ontario, Canada, January 23, 2016. REUTERS/Mark Blinch