Golden Gate Capital Raises $700 Million Investment Fund Focused on High-Growth Companies in Change-Intensive Businesses
New Fund Will Specialize in Growth Company Buyouts with Hybrid LBO-Venture Approach Aimed at the Under-Served, Sub-Billion Dollar Market
San Francisco, CA (March 14, 2001) – Golden Gate Capital, a newly formed private equity firm, today announced the closing of its initial fund totaling $700 million. Golden Gate Capital will seek to partner with management of privately and publicly held companies to pursue buyouts, recapitalizations, leveraged build-ups and growth equity investments in high-growth, change-intensive businesses. Transaction sizes will range from $25 million to $500 million with equity requirements of up to $100 million.
“Golden Gate Capital has the unique combination of a buyout firm’s abilities to manage complex transactions and work with legacy businesses and the growth focus and expertise found in venture capital firms. Our distinct set of capabilities will enable us to unlock value in growth companies,” said David Dominik, managing director at Golden Gate Capital. “Golden Gate Capital will partner with management to capitalize on the attractive investment opportunities that currently exist in today’s turbulent global economy.”
Golden Gate Capital will seek to fill the void left by many of the traditionally successful middle market buyout firms, which have grown to where their focus is now on mega-deals valued at $1 billion or more. Mr. Dominik, previously a 10-year partner focused on technology investing at Bain Capital, and Jesse Rogers, the founder and former leader of Bain & Company’s private equity group, were both attracted to the opportunity to build a best-of-breed firm focused on the special needs of growth companies.
They, along with fellow managing directors Prescott Ashe and Ken Diekroeger, found it to be both compelling and a natural fit given their collective backgrounds. Mr. Ashe, also from Bain Capital, has worked in close partnership with Mr. Dominik over the years on several successful investments in the semiconductor and electronics manufacturing industries. Mr. Diekroeger was most recently at American Industrial Partners, where he was a senior partner and a member of the management and investment committees. All four principals began their careers at Bain & Company, which was the original connection between them, and their experiences at Bain helped form the common investment philosophy they bring to Golden Gate Capital. They have more than 40 years of experience in private equity investing, primarily working on growth-oriented buyouts.
The Golden Gate Capital model builds upon four distinctive elements: world-class analytics, the ability and resources to work with and add value to growth companies, significant transaction experience and technological expertise. “The first two elements are clearly drawn from the Bain & Company and Bain Capital heritage, and are the drivers behind involving Bain & Company as a special limited partner,” said Mr. Rogers. “The technology emphasis comes directly from our focus and experience at Bain Capital and is substantially enhanced by our other special limited partner, Sutter Hill Ventures,” said Mr. Dominik.
Golden Gate Capital principals have an outstanding track record of creating wealth by systematically working with growth companies operating in volatile environments to build their businesses. This includes working through complicated turnarounds, managing aggressive acquisition and integration programs, and facilitating organic growth initiatives. They have done this by fielding dedicated resources for months, and sometimes years, to help management accelerate change. “We have the ability and resources to tackle challenging situations,” said Rogers. “Where others pull back, we often see extraordinary opportunity.”
“Given the current economic climate, our ability to raise $700 million from blue-chip investors, and be heavily over-subscribed is a validation of the historical success we have demonstrated in applying this investment philosophy. It also serves as an endorsement of the team we have assembled,” said Mr. Rogers.
The firm will also pursue partnerships with corporations seeking to divest themselves of non-core businesses. “The obsession with growth over the past decade has resulted in many companies straying from their core businesses,” said Mr. Rogers. “As we see more corporations seeking to shed non-core businesses, Golden Gate Capital can partner with them to maximize shareholder value for the divested businesses. In some cases, it may even make sense to take the entire company private.”
Golden Gate Capital’s technological focus will include semiconductors, electronics manufacturing products and services, communication hardware and services, software and related services, IT services, business services and media content and services. Additionally, Golden Gate Capital intends to pursue other high-growth change-intensive industries outside of technology, including certain segments of financial services, consumer products and healthcare.
About Special Limited Partners
Golden Gate Capital will leverage the network and capabilities of its two Special Limited Partners, venture capital firm Sutter Hill Ventures and worldwide consulting firm Bain & Company. Golden Gate Capital and its Special Limited Partners will align interests with that of their investors and their portfolio companies by making a direct investment of more than $100 million into the fund, emphasizing the principals’ confidence in their investment strategy.
About Golden Gate Capital
San Francisco-based Golden Gate Capital is a $700 million private equity firm specializing in high-growth, change-intensive buyouts, with a focus on technology-driven companies. The principals have more than 40 years of experience with an investment model that has consistently outperformed the market by stressing world-class analytics, the ability to add value, technology acumen and transaction experience. Golden Gate Capital seeks to partner with management to pursue buyouts, recapitalizations, leveraged build-ups and growth equity investments with transaction sizes ranging from $25 million to $500 million with equity requirements of up to $100 million. For more information, visit www.goldengatecap.com.