The Jordan Co. held a first and final close on its inaugural private equity fund. The New York-based firm has been participating in middle-market buyout deals for over two decades, but the majority of those commitments have been made through a closed-end investment trust listed on the London Stock Exchange. This latest effort, named The Resolute Fund, was launched in March with a $1 billion target and received approximately $3 billion in investor interest before being capped at $1.5 billion.
The two most senior guys at The Jordan Co. are co-founders John “Jay” Jordan and David Zalaznick, a pair of investors who met up in 1980 to bootstrap buyout deals for Karl Marx & Co. After about 20 transactions, the pair launched their own firm and continued soliciting I-banks on a deal-by-deal basis until creating the closed-end investment trust, named JZ Equity Partners, in 1987. While that vehicle didn’t reflect the more standard GP/LP structure, it offered significant tax benefits and kept Jordan in the mix when it came to LBO opportunities in the industrial and manufacturing sectors.
Between 1997 and 2001, The Jordan Co. invested approximately $600 million, but had to slough off approximately $125 million more on other equity sponsors because of capital constraints. Such frustrations helped lead the firm toward the realization that it needed to up its own ante. It then hired Atlantic-Pacific Capital Inc. as its placement agent.
The new fund is expected to invest in 15 to 18 portfolio companies, some of which will be strict value plays with cash flow multiples of 5X or 6X, while the rest will be potential platform, or add-on, investments. “Even though they raised $1.5 billion, this is still a middle-market firm,” says Atlantic-Pacific’s Peter Zidlicky. “The only real difference in terms of their types of investments will be that they’ve shifted a bit from only doing their bread-and-butter rust belt deals to also investing in services-oriented types of things.”
Some of the Resolute Fund’s largest limited partners include: Abbott Capital Management, Adams Street Partners, AMR Investments (American Airlines), HarbourVest Partners, NIB Capital, Pantheon Ventures, Pathway Capital Management, Teacher Retirement System of Texas and the Government of Singapore. Approximately 15% of the fund’s LPs were from Western Europe, including a large number from the UK.