Texas Growth Fund –

AUSTIN, Texas – Texas Growth Fund (TGF) invests in late-stage manufacturing, distribution and service companies that conduct business, but are not necessarily headquartered, in Texas.

TGF has raised three funds since it began making private equity investments in 1991. Its latest, the $450 million Texas Growth Fund II 1998 Trust, is expected to be fully invested in some 25 to 30 companies in about three to five years. The fund was launched in April 1998 and has so far made five investments totaling $70 million.

The Texas Growth Fund 1995 Trust closed on $75 million and the Texas Growth Fund 1991 Trust wrapped on $52 million. The firm’s average individual investment typically ranges from $10 million to $15 million but is capped at $45 million.

TGF always co-invests but will begin to lead more deals because of the bigger size of its latest fund, said Jim Kozlowski, a principal at TGF. “Several factors were combined to make this fund so much larger than the previous two; our track record and performance gave confidence to investors, in addition to new opportunities arising in the market,” he added.

TGF’s limited partners include Texas-based pension funds and endowments.

The firm has committed more than $575 million and specializes in structured equity and subordinated debt investments that finance buy-and-build strategies and material expansions. The firm does not back start-ups, real estate, oil or gas companies.

TGF is led by four principals: Stephen Soileau, Brent Humphries, and Barry Twomey and Kozlowski, all of whom usually take board seats. They work with a nine-person advisory board made up of prominent investment professionals from Texas.

The following is a list of TGF’s most recent portfolio companies:

Sterling Foods Inc. (San Antonio, Texas) is a leading supplier of bakery products to the United States military and to commercial food-service companies

Co-investors included Equus Capital Corp., White Oak Co. and Greyhound Financial Corp.

Administaff (Kingwood, Texas) provides a suite of services to businesses, including employee benefits, payroll processing, a 401(k) plan, recruiting, training and evaluation and workplace safety assessment.

Bankers Trust Investment Partners was a co-investor.

Coastal Towing Inc. (Houston) is a provider of barge towing services.

Co-investors included SCF Partners, First Interstate Bank and Premier Bank.

Garden Ridge Corp. (Houston) is a megastore retailer offering home accessories, seasonal products and crafts.

Allied Capital, Equus Capital Corp. and Triad Ventures were co-investors.

Total Safety Inc. (Houston) is an authorized distributor for more than 200 leading manufacturers of environmental, fire and safety equipment and instrumentation.

Co-investors included Midwest Mezzanine and Gulf Star Group.

Q Clubs (Akron, Ohio/Austin, Dallas, Houston, Texas) is a health club network with personal trainers and massage therapists.

Austin Ventures, First Union Capital Partners, Marquette Venture Partners and NationsBank Leveraged Capital were co-investors.

Rehab Designs of America (Overland Park, Kan./Houston, Austin, San Antonio, Texas) is the second largest prosthetics provider in the country, with 70 offices in 11 states.

Co-investors included Electra Fleming Inc., Child Health Investment Corp. and Capital Health Partners.

Hoak Breedlove Wesneski & Co. (Dallas) is an investment and merchant-banking firm that provides financial services to private and public middle-market growth companies in targeted industries.

Turfgrass America (Granbury, Texas) grows, sells and installs warm season turf grasses.

Equus II Inc. was a co-investor.

Con-Equip Inc. (Houston) is a distributor of heavy equipment, including cranes, excavators, bull dozers, dump trucks, wheel loaders, scrapers and tractors.

Co-investors included Heller Financial Inc. and Sanders Morris Mundy.

MoneyStar Communications (Austin, Texas) provides the financial community with financial planning software, Internet-based digital distribution and services.

Austin Ventures, Century Capital and Deutsche Banc Alex. Brown were co-investors.

Stellar Event & Presentation Resources Inc. (Houston) is an entertainment rental company that provides tents, catering equipment and temporary-structure construction.

Co-investors included Rice Sangalis Toole & Wilson and Heller Financial.

Veridian Corp. (Alexandria, Va., Houston, San Antonio, Texas) provides high-end, information-based software, simulation equipment and sensors primarily to the national security and safety industry.

Monitor Clipper Capital Partners and CIBC World Markets were co-investors.

Texas Growth Fund is located at 111 Congress Avenue, Suite 2900, Austin, Texas 78701-4043. tel: (512) 322-3100, fax; (512) 322-3101.