March 12, 2019 / 4:05 AM / 6 months ago

Ex-Golden Gate dealmaker raises $1.5 billion private equity fund

NEW YORK (Reuters) - Arcline Investment Management, a U.S. private equity firm set up by former Golden Gate Capital dealmaker Rajeev Amara, said on Tuesday it had raised $1.5 billion, the largest debut for a North American buyout fund in almost a decade.

Arcline began fundraising in October with an original target of $1.25 billion and closed at its “hard cap” limit, or the maximum it could raise, according to people familiar with the matter.

This latest fundraising is the biggest example in recent years of a seasoned private equity manager leaving an established firm to raise his own fund. Demand for these funds has been strong because more well-established funds are often oversubscribed.

Amara left Golden Gate in 2018 after 18 years with the San Francisco-based firm, where he was responsible for the industrial sector, including deals for safety equipment maker Safety Technology Holdings and Springs Window Fashions, a provider of window-covering products.

Arcline’s strategy is to buy middle-market industrial businesses, which the firm defines as companies with less than $1 billion in revenue, and boost earnings without using add-on acquisitions.

Its investors are mainly university endowments, sovereign wealth funds, family offices and charitable foundations, Arcline said in a statement.

Arcline follows an earlier breakaway fund from Golden Gate when firm veterans Stefan Kaluzny and Peter Morrow in 2011 set up Sycamore Partners, whose investments include U.S. office supplies chain Staples Inc.

The $1.5 billion raise is the biggest first-time fundraising for a buyout-focused North American manager since BDT Partners’ $3 billion vehicle in 2010 and the 12th largest of all time, according to industry tracker Preqin.

Just over two-thirds of investors looking at first-time funds are focused on funds which are spinning out from established private equity firms, according to a survey last year by Probitas Partners.

Other such out efforts include Alexander Navab, the former head of KKR & Co Inc’s (KKR.N) Americas private equity business, who is starting a new buyout firm with backing from Goldman Sachs Asset Management, Reuters has reported. [nL2N1WP1XN]

Reporting by Joshua Franklin in New York; Editing by Cynthia Osterman

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