Written by Lynne Marek for Crain's Chicago Business
There’s been a surge in private-equity firm openings this year, including several new Chicago names across a variety of industries.
RiverGlade Capital, Core Industrial Partners, and Kinzie Capital Partners have all hung out new shingles this year in Chicago. While RiverGlade focuses on health care services, Core Industrial is eyeing industrial and manufacturing companies while Kinzie is looking to do deals in consumer, manufacturing or service sectors.
All three are focused on buying stakes in companies operating in the lower middle market, which typically means firms with less than about $250 million in annual revenue. That’s a sweet spot for Chicago private-equity firms, with even the biggest, such as GTCR and Madison Dearborn Partners, often buying companies on the upper end of the middle market.
Private-equity firms typically buy controlling stakes in companies and fund their expansion, often while reducing or restructuring costs, with an aim to sell them in five years or less at a profit. The number of private-equity firms declined in the wake of the recession a decade ago as debt financing for deals dried up and equity values declined.
That was then, and this is now. This year, the number of private-capital firms, including private-equity and venture capital, has increased by 309, or about 4 percent, so far, on top of about 500 being founded last year, for a total of about 7,500 active firms now, according to the industry research firm Preqin. The sector had about $4.6 trillion under management worldwide as of the end of last year.
Core Industrial is led by John May, who has 20 years of investing and operating experience, including 16 years working for the New York giant investment firm Blackstone Group and leading six private-equity backed companies, according to the firms web site. He has assembled six professionals to work for the firm and has guidance from an advisory board that includes Enova International CEO David Fisher. May declined to comment for the story.
Kinzie Capital is led by Suzanne Yoon, who previously led a Chicago office for Philadelphia-based private-equity firm Versa Capital Management.
“We have extensive experience combining proven business strategies and operating discipline with an entrepreneurial ability to adapt and execute in a changing marketplace,” Yoon said earlier this year in announcing the opening of Kinzie.
RiverGlade is led by Garrick Rice and Danny Rosenberg, managing partners who were previously professionals at Sterling Partners, a firm that decided this year not to raise another fund.
Original article found here.