May 3, 2022

Compass Group Announces Final Closing of Oversubscribed Fund II

Compass Group announced the closing of Compass Group Fund II at its hard cap of $255 million, exceeding an original target of $200 million. The firm secured commitments from a broad array of high-quality limited partners, including university endowments, family offices, pension funds, insurance companies, funds of funds and other institutional and high-net-worth investors through a significantly oversubscribed fundraising process that took just over six months to complete.

“We are honored by the investor confidence in our strategy and track record, resulting in an outcome that surpassed our projections for both timing and value,” said John Huhn, Compass Group Managing Partner. “While this is our first pooled fund, we chose the name Fund II to reflect a continuation of the same thesis-driven approach we’ve successfully deployed for more than seven years under an independent sponsor model. Since 2015, we invested more than $200 million in eight portfolio companies and over 100 add-on acquisitions and completed three exits at returns exceeding expectations. Our mission remains the same – to help lower middle-market companies grow and succeed – and we look forward to continuing to advance the Compass Group strategy with Fund II.”

Compass Group implements a top-down thematic investment approach in the lower middle market by identifying and extensively researching sub-sectors with strong macro trends within the niche manufacturing & distribution and business & consumer services sectors. Compass seeks to partner with target companies with the following attributes:

• Historically successful entrepreneur and family-owned companies that have reached an inflection point for growth, want continued participation and partnership in the business and where the Fund would represent the first institutional capital;
• Mid-America “Between the Mountain Ranges” geographic focus, which tends to align well with Compass Group’s Midwestern presence and values; and
• Financial characteristics including EBITDA between $2 million and $12 million, enterprise values of $10 million to $100 million and strong margin and cash flow generation.

“We’ve already deployed capital on our first investment in Fund II, through the recent acquisition of KGM, a Tulsa-based value-added distributor of valves, meters and regulators serving utilities and municipalities,” said Chris Gibson, Compass Group Managing Director. “We’ve come out of the gate strong and look forward to partnering with additional high-quality companies to tap into opportunities for continued growth and value creation for our business partners, investors and employees.”

Aqueduct Capital Group served as the exclusive placement agent for fundraising. McGuireWoods and Maples Group provided legal counsel. E78 Fund Solutions will serve as the Fund’s administrator with BDO serving as the Fund’s independent auditor.

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