Consumer-focused private equity firm Yellow Wood Partners has raised $225m of capital for its debut fund, exceeding its initial $200m target and attracting commitments from a small group of blue chip investors.
The capital will be used to invest between $10m and $80m of equity in control or minority investments in the consumer packaged goods industry.
The capital will enable Yellow Wood to buy businesses with a combined enterprise value approaching $1bn over the next three to five years. The firm’s investors include endowments and foundations based in North America, the Middle East and Australia.
The Boston-based firm was founded in 2009 by Dana Schmaltz and Peter Mann, two executives with experience investing in and operating consumer packaged goods businesses such as Blacksmith Brands, Prestige Brands, Meow Mix, Medtech, and the Spic And Span Company, the firm said.
The team created Blacksmith in partnership with Charlesbank Capital Partners by buying five over-the-counter brands from Johnson & Johnson in October 2009, and then growing and selling the company to a strategic acquirer in November 2010 for a 2.5 times ROI and a 149 per cent IRR.
Schmaltz said, “Yellow Wood is taking a whole new approach to institutional investing. Our firm is not built around the standard private equity model consisting of investment professionals augmented by a group of operating partners, but instead is a team that has worked together at Blacksmith and in prior companies to operate and grow businesses.”
Mann added, “Our approach allows Yellow Wood to better analyse the drivers of successful businesses and assist our portfolio management teams in exceeding their internal growth targets. We feel strongly that many businesses in our core middle market space can leverage the management skills we deployed at Blacksmith in creating, growing and eventually profitably selling the company.”
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