Peachtree Equity raises $60M for lending fund - Pacific Business News (Honolulu):

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The fund, called Peachtree II L.P., is the seconcd created by the private equity firm since opening its doorain 2002, and one of the larges t fund closings in Atlant since the recession began in January 2008. Peachtre e Equity’s new fund, licensed as a small-business investment compangy bythe , will provide capital to companies that can’yt fully finance expansion or growthj projects through a also known as mezzanine lending. Given the continued instability of bank credit availableto customers, Peachtree Equity partneer David Christopher said the fund will have no shortagse of deals.
“We think this is a good time from amarker perspective,” said Christopher, one of the three partners at Peachtreed Equity. “This market is creatinvg attractive opportunities.” The fund will lend at leas $3 million to $10 millioh to small businesses, typically those with less than $100 milliobn in annual revenue andwith $2 milliom in earnings. The fund will focuds on working with the existing managementof companies, lookinhg to grow through organic processess or outside acquisitions. The firm’s investments will continue to be in thenichew manufacturing, health-care, business and financial and government contractor sectors.
But with the opportunityt comesincreased competition. Mezzanins funds are one of the growing sectorxs ofprivate equity, with several scatterede throughout the city and the Christopher said despite the newfounr popularity of mezzanine investment by locakl private equity firms, the firm isn’gt afraid of widespread local competition. “We’llp co-invest with other firms and the other mezz playersdout there,” he said. “We don’t see them as necessarilyt direct competition.” The $60 million raised is the first closinhg ofthe fund.
Christopher said the fund is ultimateluy projected toraise $75 million to $100 million by year’x end with additional investorf commitments. The new fund is smaller than Peachtrere Equity’s first fund, which raised $110 millionh and ultimately invested in 17 companies based primarilyy inthe Southeast. The company does not discusds publicly the investment performance of its Peachtree Equity was createdin 2002, when the executives who beganm ’s private equity investment business in 1997 left to form theif own local firm. Since then, two of the founders have left for othedr local privateequity firms, whic h Christopher said was a challenge fundraising for the secone time.
Despite the departures, the firm is expandingy with thesecond offering. Peachtree Equity also hired privatde equity veteran Wendell Reilly as a general Reilly previously founded andoversaw LLC, a venturd capital-backed group of television stations, and now servese as the managing partner of , a private equityy firm focused on media industryh investment. Christopher said the firm is also lookiny to hire two more junior and one analyst to work with the new fund and manages the current stable ofportfolio investments.
Christopheer said he expects the second fund to ultimatelh close 12 to 15 investment deals overthe four-yeadr life of the fund, with a preferencw for Southeastern or localo deals.