September 3, 2004

Castanea Partners to close fund
by Kelly Holman

Castanea Partners Inc. of Newton, Mass., plans to announce the closing of its second private equity fund on Tuesday, Sept. 7, at $207 million.

Princeton University and Yale University investors led a small group of endowments and foundations that invested in the firm's Castanea Partners Fund II LP. Castanea's managing partners also committed an undisclosed amount of capital to the new fund.
"We're really looking to do a small number of deals in a small market where we can spend time working with the companies we invest in," said Brian J. Knez, a Castanea managing partner.

The new fund will make equity investments of $10 million to $20 million in buyouts, troubled companies or businesses needing growth capital. It will target small and midsized publishing and information, human resource and business services, consumer product and specialty retail companies that are valued at $75 million or less.

Knez, a former co-chief executive of Neiman Marcus Group Inc., said Castanea can contribute strong operations expertise to its portfolio companies because he and the other co-founders have executive experience.

Castanea's other founders include Robert Smith, a former co-CEO of Neiman Marcus with Knez, and Paul Gibbons, who was a former vice president and treasurer for Harcourt General Inc. as well as an ex-Neiman Marcus executive.

Knez, Smith and Gibbons founded Castanea, which means "chestnut" in Latin, in 2001. The firm has a staff of nine professionals.

In January, Castanea teamed with Boston Ventures Management Inc. to recapitalize Waltham, Mass.-based biotechnology research publisher Decision Resources Inc. in a $58 million deal. Two months later, Castanea invested in Englewood Cliffs, N.J.-based Fuze Beverage LLC.

The firm started premarketing its new fund late last year and launched its fundraising efforts in earnest in January without a placement agent.

The new fund follows a $75 million fund that Castanea raised three years ago.

Goulston & Storrs PC directors Lester Fagen and John Grumbacher and Ropes & Gray LLP attorneys John Ayer and Sean Murphy provided counsel to Castanea.

< BACK