STAMFORD, Conn. – Can venture capitalists invest predominately in companies that are geared toward minority markets? TSG Capital Group, L.L.C., a private equity firm specializing in ethnic market investments, thinks so.
The $515 million TSG Capital Fund III closed in January 1999, and one-third of the vehicle is invested. TSG’s first $20 million fund, TSG Ventures, was succeeded in 1995 by a $225 million vehicle, TSG Partners II. As fund sizes grew, the firm adopted a broader business strategy that required investments in industries with locations in some of the country’s poorest neighborhoods.
TSG invests between $40 million and $50 million in expansion-stage communication, media, light manufacturing and consumer companies over the course of several rounds. The firm declined to provide names of venture co-investors.
The firm commonly is the lead investor in the first round and is the sole equity investor in most deals. Eighty percent of TSG’s limited partners are state pension funds.
TSG, formerly known as Equico Capital Corp., was a Minority Enterprise Small Business Investment Company (MESBIC), and Equico’s SBA funding had mandated that the firm invest in minority-owned businesses. The name change took place in 1994 when Equico’s President, Daune Hill, and co-founder, Cleveland Christophe, led a managerial acquisition of TSG.
TSG is led by general partners Mark Inglis. Darryl Thompson and Mr. Christophe.
Select TSG portfolio companies follow:
Hayes Lemmerz International Inc. (Romulus, Mich.) is a publicly-traded manufacturer of automobile wheels.
Millennium Digital Media Holdings (St. Louis, Mo.) is a cable television holding company that provides high quality video and other broad band telecommunications services to residential customers in major metropolitan markets.
Orbseal (Richmond, Mo.) manufactures, designs and supplies high-performance automotive sealant, adhesives and sound abatement products to equipment and interior system suppliers.
Urban Brands Inc. (Secaucus, N.J.) is a specialty retailer geared toward African-American and Hispanic women. The company operates several retail stores including Ashley Stewart and Marianne.
Urban Children’s Store Inc. (West Conshohocken, Pa.) is a discount children’s apparel and accessories retailer, that operates 54 stores in the East Coast and Midwest.
Vista Media Group Inc. (La Mirada, Calif.) provides and operates “eight-sheet” billboards, which are located in New York City, Los Angeles and cities with large African-American and Hispanic populations.
Z-Spanish Media (Sacramento, Calif.) owns and operates 30-Spanish language radio stations in California, Texas and other mid- to-small markets with large Hispanic communities.
TSG Capital Group is located at 177 Broad Street, 12th Floor, Stamford, CT 06901, tel. (203) 406-1055, fax (203) 406-1590.