NEW YORK – Sentinel Capital Partners invests in late-stage business-to-business services companies and outsource manufacturing and consumer companies in the United States and Canada. The firm does not back start-ups, information technology or biotechnology companies, preferring to confine itself to its core competencies, said founder David Lobel.
The firm’s latest vehicle, Sentinel Capital Partners II L.P., held a $90 million first close in June 1998 and a $105 million second close in December 1998. The fund wrapped on $126 million in June 1999, $1 million above target. By the end of last year, the fund was 45% committed to four investments. The group’s first vehicle, Sentinel Capital Partners L.P., wrapped in May 1996 on $50 million and is fully invested in seven companies.
By the second fund’s launch, the firm had increased its staff, structured its strategy and built sufficient deal flow to manage more than twice the capital of Sentinel’s freshman vehicle, Lobel said. The firm is recruiting two more investment professionals.
“We like to make two to three investments each year, and although we want to commit the remainder of the second fund as fast as possible, we want to be prudent as well,” he added. With about $200 million under management, the firm invests between $15 million and $20 million in each deal, and averages some $25 million over the life of a portfolio company. Sentinel does not invest less than $8 million per deal and the firm usually is the lead or sole investor.
Target companies must have at least $4 million pre-tax revenue and typically have a valuation of up to $125 million, but no less than $20 million to $25 million. Apart from providing venture capital, the firm also finances leveraged buyouts and recapitalizations, corporate divestitures, growth-oriented financings, industry consolidations and restructurings.
Sentinel’s limited partners include Kemper Insurance Co., Fleet Financial Group, the Mayo Foundation and Bear, Sterns & Co., as well as a number of high-net-worth families and individuals. Pacific Corporate Group, Prudential Insurance Co., Chase Manhattan Bank, Heller Financial Inc., MassMutual Life Insurance Co. and the University of Wisconsin are all new partners for Sentinel Capital Partners II L.P.
Lobel and John McCormack are co-founders of Sentinel. Eric Bommer and James Coady are vice-presidents, Frank Richardson and Michael Myers are senior advisory partners, and Christopher Weiler is a principal.
Following are some of the Sentinel Capital Partners portfolio companies:
Border Foods Inc. (Minneapolis) owns and operates all Taco Bell restaurants in Minnesota and has exclusive rights to develop the brand in-state.
Cottman Transmission Systems Inc. (Fort Washington, Pa.) franchises automotive transmission service centers.
Co-investors include Antares Capital Corp. and Heller Financial Inc.
Falcon Holdings L.L.C. (Chicago) owns and operates 97 Church’s Chicken Restaurants and is the largest franchisee in the worldwide Church’s system.
Floral Plant Growers L.L.C. (Denmark, Wis.) produces, markets and sells specialty floriculture products to lawn and garden centers of mass merchant retailers.
Heller Financial Inc. was a co-investor.
HASCO International Inc. (Earth City, Mo.) is the largest provider of in-hospital infant portrait services in the U.S. and Canada and operates under the First Foto trade name.
Co-investors included First Century Partners and Fleet Equity Partners.
Met Merchandising Systems (Chicago) designs and manufactures high-quality fixtures and decorative and graphic displays for upscale retail stores.
Norsun Food Group L.L.C. (Cincinnati) is supplier of specialty food ingredients to large packaged-food companies and restaurant chains.
Romacorp Inc. (Dallas) operates and franchises Tony Roma’s restaurants in the U.S. and abroad.
Travelers Insurance Co., Bear Sterns Merchant Banking and Provident Capital Corp. were co-investors.
Sentinel Capital Partners is located at 777 Third Ave., 32nd fl., New York, NY 10017, tel: (212) 688-3100, fax: (212) 688-6513. The firm’s Web site is at http://www.sentinelpartners.com.