CHICAGO -- Wind Point Partners III made two more investments in August, bringing its commitments to $70 million.
The $215 million private equity fund invests primarily in companies in the Midwest. The latest two deals -- the recapitalization of Pacific Cycles, Madison, Wis., and Wilson Pest Control, Atlanta -- bring the number of deals done to nine so far.
Richard R. Kracum, managing director, said the fund makes investments based on two criteria: superior growth prospects and a good management team.
Mr. Kracum said Pacific Cycles had a growth rate of about 25% per year for the past four to five years, and Wind Point believes the firm should be able to sustain that.
He said the firm has been a pioneer in what has been a highly fragmented industry. Where previously only independent dealers sold higher-end bikes (costing $400 and up), and mass merchandisers sold only lower-end bikes (costing up to $150), Pacific Cycle has established a distribution network to get higher-end bikes sold through the mass merchandise market. Pacific Cycles designs the bikes and works with manufacturers to make sure the high-end features can be produced at about half the price.
In the Wilson Pest Control deal, Wind Point III provided acquisition capital. Mr. Kracum said the company has a strong management team and terrific prospects for growth. He noted the pest control industry is highly fragmented, with two dominant players -- Orkin Pest Control and Terminix Corp. There's no other alternative to small business owners wanting to sell. "This is a friendly, viable alternative" to the two industry giants, Mr. Kracum said. The firm already has four acquisitions, mostly in the range of $2 million to $10 million.
Wind Point Partners III has 30 to 35 limited partners, almost all of which are repeat investors. Pension and endowment fund investors account for about 90% of Wind Point III's assets and include the Michigan Department of Treasury, State of Wisconsin Investment Board, General Motors Corp., Chrysler Corp., Ford Motor Co., Northwestern Mutual Life Insurance Co. and the Mayo Foundation.
Stephanie Van Koevering, a spokeswoman with the Michigan Department of Treasury, said the state has invested in all three Wind Point funds, with a total investment of $40 million.
And while the $42.7 billion pension fund doesn't have an in-state investment mandate, nor does it require one from Wind Point, she said officials are very pleased that Wind Point has invested in many Michigan entities. It's "one of the nice side benefits," she added.
Ms. Van Koevering didn't have exact return figures, but she said Wind Point Partners I was in the second quartile of Venture Economics' universe; and Wind Point Partners II and III are both ranked in the first quartile.
Mr. Kracum said Wind Point Partners expects to raise another fund in the first quarter of 2000.