Sun Capital Partners, fresh off 14 acquisitions this year, plans to raise another fund once it finishes investing the rest of its current $500 million fund, said Jason Neimark, principal. There is still about $430 million left on the Sun Capital Partners III fund and it is still too soon to anticipate the size of the next one, he noted. The fund, which was raised last January, originally had more than $2 billion in commitments, he noted. The commitments are not being rolled over into a future fund. Participating in Sun Capital's funds are financial institutions, fund-of-funds investors, university endowments, pension funds, and high net worth individuals, families and trusts.
Sun Capital can invest approximately $200 million of capital in any one transaction and bridge the entire purchase price, raising permanent debt financing post-closing. Neimark cited that in the case of its Musicland Holding Corp. acquisition during the summer, Sun Capital got Cerberus Capital Management affiliate Ableco Finance to provide a $75 million interim credit and then received more permanent financing with a $200 million asset-based credit led by Congress Financial and Fleet Retail Finance. Sun Capital contributed $50 million to this facility.
Sun Capital is not a typical leveraged buyout firm, Neimark noted. He explained that the Boca Raton, Fla.-based entity focuses on turnarounds, underperformers and non-core assets of large corporations. The firm is set up as a hybrid dealing with LBO's, crisis management and operations management. "We focus on good companies with a poor financial management and/or operating situation," he said.