Resilience Capital Partners spent much more time raising its third fund, which closed at $225 million in May, than its second pool.
A lot more time in fact. The Cleveland private equity firm took 18 months to raise The Resilience Fund III LP. Marketing began in late 2010, the firm hit a first close in May 2011 and a final close occurred in May, says Steve Rosen, Resilience’s co-CEO.
By comparison, Resilience spent 90 days marketing for its second fund, which raised $45 million in 2006. That pool was much smaller and capital came from Fund I’s existing investors, Rosen says. This included high net worth investors and family offices. “There was not really much of a marketing process that took place,” Rosen says.
Fund III was Resilience first institutional pool, says Bassem Mansour, Resilience’s co-CEO. The PE firm didn’t disclose investors but they included pension funds, insurance companies as well as foundations and endowments, according to a statement. About one-third of the LPs are from Europe, Rosen says.
“[Fund III] was our first broadly marketed fund and we wanted to get a good group of LPs,” Mansour says. “We see the value of having a quality group of LP.”
Fund III, which has already invested in three platform companies, came in above its $200 million target. “Our job is to find unique opportunities and that’s what [the LPs] recognized,” Mansour says.
With such a large increase in fund size, both Rosen and Mansour maintain they didn’t experience any pushback from LPs. Resilience, which targets the lower middle market, typically invests $10 to $30 million equity per deal. The PE firm focuses on turnarounds, corporate divestitures, and underperformers. About half of deals are in the industrial/manufacturing sectors, while a quarter are in business services.
The LPs, the co-CEOs say, did want to make certain that Resilience stayed consistent with its investment thesis. For its next fund, Resilience agreed to a $350 million hard cap, Rosen and Mansour say. “We were very happy agreeing to that,” Rosen says.
Paul Delaney and W. Mitchell Fenimore of Griffin Financial Group acted as placement agent. John Saada of Jones Day provided legal advice.
Photos courtesy of Resilience Capital