July 18, 2016
OpenGate Raises $305 Million for Institutional Private-Equity Fund
By Chris Cumming WSJ / Dow Jones
In a recent article featured in The Wall Street Journal / Dow Jones, OpenGate Capital’s founder, Managing Partner & CEO speaks about the firm’s evolution and strategy for acquiring lower middle market, corporate carve-outs.
OpenGate Capital, a specialist in lower midmarket corporate carve-out transactions, has raised its first institutional fund after more than a decade of investing its own capital in dozens of private-equity deals.
The firm closed OpenGate Capital Partners I LP at $305 million, above the vehicle’s $300 million target, according to a news release.
UBS Private Funds Group was the placement agent and Kirkland & Ellis the fund counsel. The firm started raising capital about a year ago, WSJ Pro Private Equity reported.
OpenGate was founded in 2005 by Andrew Nikou, who previously had worked for Platinum Equity in Paris, building the firm’s business-development operations for Europe, he said.
OpenGate, which has offices in Los Angeles and Paris, focuses on carve-outs and divestitures from Fortune 1000 companies, especially lower midmarket and cross-border deals. The firm generally targets companies with $50 million to $1 billion in annual revenue in North America, South America and Europe.
Mr. Nikou founded the firm because he saw a “big void in the marketplace,” with few competitors targeting the lower midmarket divestitures and even fewer with the regulatory expertise to handle cross-border deals, he said.
When OpenGate started, “there really wasn’t anyone executing on the cross-border, pure corporate carve-outs of sub-$150 million of enterprise value,” he said.
The firm has made about 30 investments so far. OpenGate was able to bump up its deal size following the sale of Ride Control LLC to MAT Holdings, Inc., which earned a strong return, Mr. Nikou said.
Although the firm’s fund received investments from large, international institutional investors, OpenGate remains “one of the largest [limited partners] in the fund,” with a general partner stake that is “astronomically higher than usual,” Mr. Nikou said.
The firm has so far closed four investments from the fund: Alfatherm, an Italian maker of polyvinyl-chloride film, Bois & Matériaux, a French business-to-business distributor of building materials, Energi Fenestration Solutions, a manufacturer of vinyl products, and Power Partners Inc., a maker of transformers based in Athens, Ga.
A fifth investment, for Umicore Zinc Chemicals, which recycles zinc residues, should close later this year, the firm said. The fund will be about 43% invested once that deal closes, Mr. Nikou said.
Opengate’s most recent exit was the sale of TVGM Holdings LLC, the parent of TVGuide, to NTVB Media LLC, in October. In May 2015, it exited its investment in French educational publisher, Fleurus Presse Sarl.
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