VMG Equity Partners announced today the close of its first fund on $325 million (€244 million). The fund was oversubscribed, exceeding its initial target of $300 million.
VMG, based in San Francisco and Los Angeles, is looking to invest in middle-market branded consumer product companies with enterprise values of between $20 million and $150 million. It defines its target industries to include lifestyle, wellness, food and beverage, personal care, pet and leisure. Though it has yet to invest any money from the recent fund close, it did partner with the Washington DC-based Capital Logic Partners to buy a majority stake in Timbuk2, a manufacturer and marketer of carry-all bags and accessories, in October 2005 just after VMG was founded.
Five of the firm’s six partners previously worked at The Shansby Group, now TSG Consumer Partners, a private equity firm founded in 1987 that also invests in branded consumer product companies. TSG has invested in such familiar brands as Vitamin Water and Comet, and currently holds in its portfolio Smashbox Cosmetics and Smart Balance Foods.
VMG claims to have a different approach, to which partner David Baram is integral. For seven years Baram was president and chief operating officer for the LA talent management, consumer brand development, and intellectual property creation company The Firm, which represents such celebrities as Cameron Diaz and Snoop Dog. He still serves as an officer and director. In a statement, VMG said that “this unique relationship provides access to key influencers and trendsetters in order to promote the firm’s portfolio of brands in a manner and at a cost not generally available to lower middle market consumer products companies.”
Thomas H. Lee Partners and Bain Capital acquired a minority stake in The Firm in 2004. Thomas H. Lee co-president Scott Sperling sits on the The Firm’s board.
VMG’s fundraising began in early 2006, shortly after the firm’s creation in late 2005. Blackstone affiliate Park Hill Group served as a placement agent. The fund’s some 15 limited partners include university endowments, corporate pension funds, state pension funds, and financial institutions. Partner Michael Mauzé said that the LPs were enthusiastic about VMG’s targeted investments.
“I think that there is a strong interest in having a consumer-focused firm, given the size of the consumer products sector,” Mauzé said.
He said he believed the sector would be characterised by continued innovation and entrepreneurial efforts in next few years.