Kainos Capital LP has closed an $895 million investment fund, the firm’s second, to target companies in the food and beverage and consumer goods sectors. The new fund will help broaden the size of transactions that the firm invests in.
Fund II, called Kainos Capital Partners II, raised nearly $420 million more than the firm’s 2013 inaugural fund. The fund received commitments from Fund I investors, pension plans, endowments, foundations, family offices, and other financial institutions.
Kainos Capital is a Dallas, Texas-based middle market private equity firm that targets private label or branded food and consumer product companies. The firm’s typical investment ranges between $50 million and $150 million in equity. Kainos has previously invested in companies including: Slim-Fast Foods Co., Kettle Cuisine Inc., Florida Food Products Inc., Sturm Foods Inc., Ghirardelli Chocolate Co. and more.
"In a time of robust valuations, private equity firms with their own food platforms are using them to acquire companies simply acting like a strategic buyer," says Kainos Capital partner Sarah Bradley in a 2015 interview when asked how private equity firms are competing with strategic buyers in food deals.
Strategic dealmakers and private equity firms have shown an increased interest in food deals recently. In Oct. 2016: US Foods Inc. (NYSE: USFD) agreed to buy seafood distributor Save on Seafood after its proposed merger with competitor Sysco Corp. (NYSE: SYY) fell apart; cereal giant Kellogg Co. (NYSE: K) agreed to purchase Brazilian biscuit maker Parati Group for $430 million; private equity firm Grey Mountain Partners bought gyro and Mediterranean food maker Kronos Foods Inc. with investments from its third middle market buyout fund.
PE firms have been actively raising funds for new investments. Recent fund closings include: Gridiron Capital LLC’s completion of its third fund with $850 million in commitments to target manufacturing and consumer product companies; Arsenal Capital Partners’ closing of a $1.3 billion private equity fund; Chicago-based NXT Capital LLC’s closing its fourth debt fund at $900 million; and Monroe Capital LLC’s closing of its second credit fund at $800 million.
Weil Gotshal & Manges LLP and Sidley Austin LLP served as legal counsel for Fund II, while Lazard Ltd. (NYSE: LAZ) served as placement agent.