St. Louis-based private equity firm, Compass Group Equity Partners, has announced the successful closing of its Compass Group Fund II, reaching its hard cap of $255 million. This achievement significantly exceeded the initial target of $200 million, signaling strong investor confidence in the firm’s strategy and approach. The fund attracted commitments from a diverse group 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. The fundraising process was notably oversubscribed and completed in just over six months.
John Huhn, Managing Partner at Compass Group Equity Partners, expressed his enthusiasm about this milestone. “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,” he stated. While Fund II is the firm’s first pooled fund, it represents a continuation of the successful thesis-driven approach deployed for over seven years under an independent sponsor model. Since 2015, Compass Group Equity Partners has invested over $200 million across eight portfolio companies and executed more than 100 add-on acquisitions. They have also realized three successful exits that exceeded 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,” Huhn added.
Compass Group Equity Partners employs a distinctive top-down thematic investment approach, focusing on the lower middle market. The firm meticulously identifies and researches sub-sectors exhibiting robust macro trends within niche manufacturing & distribution and business & consumer services sectors. They strategically seek partnerships with target companies possessing specific characteristics:
- Entrepreneurial and Family-Owned Heritage: Compass Group Equity Partners targets historically successful entrepreneur and family-owned businesses that have reached a growth inflection point. These are companies where the owners desire continued participation and partnership, and where Fund II would represent the first instance of institutional capital.
- Mid-America Geographic Focus: The firm strategically focuses on the “Between the Mountain Ranges” region of Mid-America. This geographic emphasis aligns with Compass Group’s Midwestern roots and values, allowing for closer collaboration and understanding.
- Compelling Financial Profile: Target companies typically exhibit an EBITDA range between $2 million and $12 million, enterprise values ranging from $10 million to $100 million, and demonstrate strong margin and cash flow generation.
Chris Gibson, Managing Director at Compass Group Equity Partners, highlighted the swift deployment of capital in Fund II. “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,” Gibson explained. This acquisition underscores the firm’s commitment to investing in critical infrastructure sectors. “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 acted as the exclusive placement agent for this successful fundraising round. Legal counsel was provided by McGuireWoods and Maples Group, while E78 Fund Solutions will serve as the Fund’s administrator, and BDO will act as the Fund’s independent auditor.
About Compass Group Equity Partners
Founded in 2015, Compass Group Equity Partners is a private equity firm based in St. Louis with a proven track record of partnering with and developing lower middle-market companies. Leveraging its operational, financial, and strategic expertise, Compass Group offers hands-on support and resources to empower management teams to surpass historical performance and accelerate growth. The firm’s commitment to a thesis-driven investment approach and focus on building strong partnerships positions Compass Group Equity Partners as a key player in the private equity landscape.
