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Rockbridge, Gilbert’s PE firm, Buys Purchasing Power

Rockbridge Growth Equity, the private equity firm headed by Dan Gilbert, recently closed its eighth deal.

Not too shabby for a PE firm that doesn’t have a committed fund. Detroit-based Rockbridge invests off of Gilbert’s balance sheet, says Kevin Prokop, a partner. Gilbert is majority owner of the Cleveland Cavaliers and chairman and founder of Quicken Loans. (Gilbert is also GM of Detroit Venture Partners.)

Rockbridge, formed in 2007, has $200 million of committed capital. The PE firm targets companies in sectors such as including business and financial services, as well as sports, media & entertainment, according to the firm’s web site. Rockbridge invests $20 million to $30 million equity per deal, Prokop says.

This week, Rockbridge announced it had acquired a majority stake in Purchasing Power. Falcon Investment Advisors also owns a “significant” stake, Prokop says. Stephens Capital was the seller. Stephens retains a small stake, Prokop says. He declined to reveal a deal value.

The transaction closed earlier this month.

Atlanta-based Purchase Power is an ecommerce company that sells “goods,” like televisions and computers, to consumers through their companies. The companies offer the Purchasing Power program to employees, who use payroll deductions to finance their buys, says Prokop.

“It is not layaway,” says Prokop. “You receive the goods upfront and you pay for it through the ensuing 12 months.”

That’s right. Buyers have 12 months to pay off their bill and are liable for it even if they lose their job or stop working for the company, Prokop says. Purchasing Power does not check credit but looks for individuals that have been employed by a company for at least six months and have a minimum annual income. Purchasing Power also looks for companies without a history of a layoffs or significant turnover, Prokop says.

The strategy seems to have worked. Purchasing Power produces revenue of more than $100 million, Prokop says. “We love the management team and business model,” Prokop says.

Will Rockbridge ever fundraise? Without a committed pool, Rockbridge typically partners with other investors, like Falcon, to close deals, Prokop says. This strategy may change. “We’re not looking to raise a fund in the near term but perhaps in the next couple years,” he says.

Ken Wasik and Mickey McFarlin of Stephens Inc., the IB of Stephens, advised on the sale. Rockbridge did not use an outside financial advisor.