Arbor News

Winner Of 'Deal of the Year' Raises Fund III

January, 16, 2012  ·  Buyouts Magazine

Arbor Investments, a mid-market private equity firm specializing in the food and beverage industry, recently closed on its third fund, Arbor Investments III LP, having raised $400 million, or $100 million more than its original $300 million target.

In 2011, the firm won the Buyouts ‘Deal of the Year Award’ for its profitable exit from Great Kitchens, the largest maker of “take and bake” pizzas in the United States and the major supplier of such products to retail chains like Wal-mart and Kroger. Great Kitchens, which Arbor Investments bought a controlling stake in for $7.1 million, was sold to Aryzta, a Swiss food company, for $180 million in 2010. The investment returned a 17.1x cash-on-cash return multiple.

Chicago-based Arbor Investments began raising Fund III early in 2011, and had an interim close last June. The firm, which now manages about $700 million in capital, plans to continue investing in the food business, focusing particularly on opportunities among private-label businesses, food service providers and the makers of non-consumables, like kitchen tools and food packaging. On Jan. 5, the firm announced it had completed the acquisition of Great Lakes, a Wisconsin-based packaging company, which joins a platform including Midland Packaging and Display, which is also based in Wisconsin.

Kim Harrod, a vice president at the firm, said “the sweet spot for Fund III will be companies with $10 million to $30 million in EBITDA and revenues up to $300 million. This represents the larger end of the deal spectrum in Fund II.” Harrod said the bulk of money for Fund III comes from public pensions, corporate pensions and university endowments. She also said two-thirds of the fund’s investors were new to the firm.

Chicago-based Shannon Advisors was Arbor Investments’s placement agent, and DLA Piper was the firm’s legal counsel. Arbor Investments was founded in 1999. Investors in its first two funds include Goldman Sachs and the Kentucky Retirement System.

By Gregory Roth

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