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Pfingsten Partners LLC closed its fourth fund, Pfingsten Partners Fund IV LP, with commitments of $525 million, as private equity firms continue to see the middle market as the best place to deploy their capital in a tight credit market.
Originally targeted at $400 million, the middle-market buyout shop's latest fund was oversubscribed by 31%. Limited partners consisted primarily of institutional investors, as well as high-net-worth individuals, families and Pfingsten Partners professionals. Pfingsten Partners typically invests in manufacturing, distribution and business service companies. Pfingsten said it views the current M&A environment as opportune for its style of investing. "We finance the acquisition of every platform company with at least 50% equity, which enables us to complete transactions, even in today's tight credit markets,." said John H. Underwood, senior managing director, in a statement. Indeed the affects of the credit crunch are increasingly spilling over into the middle market. The Deal's Vyvyan Tenorio writes: Just when the middle market was looking like a good place to be for private equity, financial buyers are getting spooked. The reason? They have had to work much harder to obtain financing commitments and to provide certainty of closing...buyers find themselves either putting up more equity in a transaction or tapping a bigger group of lenders than they've had to when times were good. On a national average, equity contribution by sponsors on all LBOs constitutes nearly 42% of deals, against 32.9% last year, according to a recent survey by Standard & Poor's. At The Deal's Fifth Annual Private Capital Symposium on Wednesday, a panel of buyout veterans will discuss the climate for deals in the middle market, including the effects of the credit crunch and how middle-market lenders are reacting to the contraction of the debt markets. Panelists include James Epstein, a partner at Pepper Hamilton; Marc Kramer, a managing director at Fenway Partners; Steven Rattner, a managing director at DLJ Merchant Banking Partners; and Adam D. Sokoloff, head of the financial sponsors group at Jefferies & Co. - George White See Pfingsten press release See Dealscape post on the middle market See profile of Pfingsten Partners on TheDeal.com See more on the Private Capital Symposium CategoriesContributed content from Middle market video
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