Catterton closes $300m growth fund

The Connecticut-based consumer specialist will make investments between $10 million and $30 million in the smaller end of the middle market.

Catterton Partners has hit a $300 million (€192 million) hard cap on its consumer-focussed growth fund.
Launched in the fourth quarter of last year, the fund will be invested in 10 to 30 high growth consumer companies requiring between $10 million and $30 million in equity.
“We’ve historically had great success in this area,” Scott Dahnke, Catterton managing partner, told PEO. “As our buyouts grew in size, we essentially ceded this ground but kept seeing opportunities in it.”
Catterton’s last fund, which closed on $1 billion in June of 2006, made investments in the $30 million to $150 million range. Catterton is still actively investing that fund.
The most recent fund is already 12 percent invested in two Catterton portfolio companies. Just last month, Catterton purchased an $18 million stake in Sweet Leaf Tea, a Texas-based ready-to-drink beverage maker; Catterton has also invested $17 million in Little Miss Matched, a San Francisco children’s clothing designer and retailer.
Dahnke indicated that the fund’s reduced acquisition targets reflect not only Catterton’s renewed interest in the lower end of the middle market but also the firm’s response to a lack of cheap leverage, as smaller deals usually require less external financing.
Catterton’s announcement comes as the US consumer sector faces increasing uncertainty over how a possible US recession will affect consumer spending. How the specter of recession will effect fundraising and deal flow is of particular concern to Catterton, whose past consumer successes have included Build-A-Bear Workshop and Breyers Yogurt.
“There’s no question LPs are focussed on [the impact of a possible recession],” said Dahnke.    “But the support we got for this fund was evidence of the fact that they have comfort as do we that our focuss on finding categories driven by fundamental trends and strong growth drivers was going to supply great opportunities, regardless of the broader economic conditions.”
Dahnke also said that the growth fund’s limited partners closely mirror Catterton’s traditional investor base, with an even mix of North American and European institutional investors. However, he added that the fund’s smaller commitment requirements attracted several new LP relationships.
The Pennsylvania Employees Retirement System has committed $75 million to the fund.