HM Capital to close fund targeting $1bn

The Dallas-based private equity firm formerly known as Hicks Muse Tate & Furst has made its first platform acquisition this year from a fund slated to close next month.

HM Capital Partners will next month hold a final close on its “Sector Performance Fund”, according to partner Jason Downie. The Dallas, Texas-based firm closed its prior fund eight years ago on $1.6 billion as Hicks Muse Tate & Furst.

Focussed on middle market energy, food and media investments, the Sector Performance Fund was targeting $1 billion (€637 million) to $1.5 billion, according to January 2007 minutes of US pension the New Mexico State Investment Council.

The target has since been adjusted down to $1 billion, a placement agent told PEO. Downie declined to comment on the fund’s target but said that there have been several closes on unspecified amounts to date.

John Muse

The Sector Performance Fund is the “second fund primarily invested by the firm’s current leadership”, Downie said.

HM Capital was founded in 1989 as Hicks Muse Tate & Furst but changed its name to HM Capital Partners in 2006, about a year after frontman Tom Hicks left the firm. John Muse is the only outstanding original partner, with Jack Furst remaining on as a senior advisor.

The firm’s rebranding and the shedding of some personnel that invested in telecom – a sector which resulted in some disastrous deals for Hicks Muse – was stressed to the New Mexico pension as it considered a $30 million investment in the Sector Performance Fund, according to the minutes.

Holland Gary of investment advisor Aldus Equity Partners also told the pension, which approved the commitment, that HM Capital’s current partners “have worked together as a cohesive team since 2001”.

The Sector Performance Fund today announced its fifth investment, the purchase of US oil and gas company TriDimension Energy for an undisclosed amount. The firm made a $50 million equity investment as part of the deal, which is its first platform acquisition of 2008. It also agreed to double its commitment over the next three years.

The investment is a “low risk oil exploitation play,” Downie said. The cash infusion from HM Capital will be used to further both organic and acquisitioned growth within the company’s existing geographic focus.

The TriDimension deal follows previous HM Capital energy investments in Texas-based natural gas companies Regency Energy Partners, TexStar Field Services and BlackBrush Oil & Gas.

HM Capital’s first deal of the year was an add-on acquisition by platform company UniTek announced last week. The communications and cable industry servicing company agreed to acquire the cable services operating unit of 180 Connect. Unitek’s acquisition is expected to be completed immediately following the merger of 180 Connect and DIRECTV in the third quarter of 2008.