A Cincinnati private equity investment group has raised $80 million for its second private equity fund.
Kenwood-based Hauser Private Equity plans to ultimately raise $100 million for the fund, Hauser Private Equity managing partner Mark Hauser told me in an interview at his firm’s office. It finalized the $80 million on Labor Day weekend in a first closing of fundraising, which allows it to start investing the money.
“We raised $80 million in 80 days,” Hauser said.
Hauser Private Equity makes two types of investments. It puts money in buyout funds that purchase controlling stakes of at least 51 percent in companies with significant growth potential, Hauser said. It also invests directly in some of the same companies in which the buyout funds invest.
“We’re a hybrid private equity fund,” Hauser said. “We believe we have the single best investment strategy in the country because of that.”
It made previous investments from its first fund of $44 million that it finished raising in 2010. Before that, Hauser made similar investments going back to 1985 using money from a small group of investors. The companies in which it has invested include Greater Cincinnati companies O’Gara Group, a security services and vehicle armoring company, and iSqFt, which makes software that helps contractors manage pre-construction bidding.
Many of its investors returned from the first fund, but it also added new investors, he said. He wouldn’t disclose names other than George Vincent, managing partner and chairman of downtown law firm Dinsmore & Shohl. Investors and companies in which it invests are national in scope.
“But Cincinnati has been a very strong presence for us,” Hauser said.
Hauser’s managing partners are Mark Hauser, Paul Swanson and Guillermo Borda. The company has invested directly in about a dozen companies so far and expects to invest in another 15 to 20 with the latest fund.
It targets companies with annual revenue ranging anywhere from $10 million to $1 billion, Hauser said. That’s a big range. These aren’t startups. It wants more than $1 million in annual EBITDA (earnings before interest, taxes, depreciation and amortization).
“These are established companies that need capital to go to the next level,” he said. These companies grow on their own and through acquisitions. Hauser and the funds in which it invests exit their deals when the companies go public or get sold to strategic buyers, typically a firm in the same industry as that company.
The buyout funds Hauser invests in typically have between $150 million and $750 million to invest, Hauser said. It has invested in about 30 funds so far and will add another 30 to 35 in the next fund. Some will be repeated, but it should have about 50 funds in its portfolio once the second fund is fully invested, Hauser said. Those funds include Revolution, a Washington, D.C.-based fund run by former AOL executives Steve Case and Ted Leonsis; Waud, based in Chicago; and Houston-based CapStreet Group.
“They have to pass the grade,” Hauser said. “We are very clear that our mission is about our investors’ return.”
It’s fulfilled that mission well. Hauser ranks in the top quartile among all private equity funds, Hauser said.