Gryphon raises $100m to bolster third fund

The San Francisco mid-market firm increased its dry powder to address opportunities in the post-subprime meltdown environment.

Gryphon Investors has raised $100 million (€67 million) annex fund for opportunities arising from changing market conditions.

Gryphon Partners III, its previous vehicle, closed on $415 million in 2006, and was about three-quarters invested by the end of 2007. Rather than begin fundraising for Gryphon Partners IV, the firm went back to its limited partners to raise additional capital through a rights offering, said president David Andrews.

“It was a very quick and simple supplemental fund, which supplemented our capital base by 25 percent,” Andrews said.

Fund III now has about $200 million in dry powder, which the firm expects to be fully committed by the end of the year. The newly raised capital will be invested pari passu with the remaining capital from Fund III.

Gryphon sought to raise additional capital in response to both specific opportunities and general market conditions, Andrews said.

“We’re more of a value-based private equity firm, so the market environment clearly has returned to that more, on the margin, after the subprime and high-yield downturns,” he said.

The firm has also signed letters of intent for two acquisitions that will likely close in February. One target company is in the healthcare services sector, and the other is in the food services industry, both sectors that would fare well should a recession occur, Andrews said.

Some of Gryphon Partners III’s recent investments include the acquisition of Western wear retailer Sheplers for an undisclosed amount in August, and the recapitalisation of leadership conference operator LeadAmerica in September, also for an undisclosed amount. The firm typically makes investments of between $25 million and $75 million.