Castanea Partners Closes Third Fund with $575 Million in Commitments

Firm Continues to Invest in Small to Mid-Market Companies in Publishing, Education, Consumer Brands, Specialty Retail, and Marketing Services

Newton, MA - July 30, 2007 - Castanea Partners announced today the close of Castanea Partners Fund III, L.P., a $575 million investment fund consisting of a $475 million core fund and a $100 million overflow fund to be used to support larger investments. Castanea’s prior investment vehicle, a $200 million fund raised in 2004, was funded by a small group of prominent endowments and foundations, all of whom increased their commitments. Several new investors joined the fund as well. As was the case with the prior funds, Castanea’s general partners contributed significant capital to the new fund.

“We are very pleased that we have the opportunity to continue our partnership with our existing investors and feel privileged to have been able to attract several other prominent endowments and foundations. It’s important to have partners who appreciate our investing with involvement strategy, who are supportive of our long-term views, and who serve as advisors in the firm’s ongoing development,” said Brian Knez, co-managing partner of Castanea.

Castanea Partners Fund III seeks to make equity investments of approximately $10 million to $75 million in leveraged buyouts, growth and acquisition investments, and operationally challenging situations. Consistent with the team’s operating experience and the firm’s overall investment strategy, the new fund will continue to focus its efforts on small to mid market companies in publishing and information services, education, consumer brands, specialty retail, and marketing services.

The fundraising comes on the heels of three successful exits from investments where Castanea worked closely with talented management teams to realize significant growth and profitability improvement.

“We were fortunate to partner with motivated and experienced managers with whom we worked closely to build significant value through operating experience,” said Rob Smith, co-managing partner of Castanea.

In March this year, Castanea sold Fuze Beverage to The Coca-Cola Company. Fuze develops and markets vitamin infused juice drinks and teas for health-conscious consumers. Castanea invested in Fuze in early 2004 and assisted management as they pursued rapid growth through continuous innovation, expanded distribution, and improved marketing. During Castanea’s investment in Fuze, the company’s revenues quadrupled. 

In July, Castanea sold Decision Resources to Providence Equity Partners. Decision Resources is a leading research and advisory firm focused on pharmaceutical and healthcare issues. In late 2003, Castanea acquired Decision Resources, in partnership with Boston Ventures. Castanea worked alongside management to expand into additional industry verticals and provided strategic advice in identifying potential targets, resulting in the acquisition of two complementary businesses. During Castanea’s investment, Decision Resources doubled sales and tripled profitability.

Most recently, Castanea sold Hanna Andersson to Kellwood Company (NYSE:KWD), a large branded apparel marketer. Hanna Andersson is a premium brand of children’s apparel sold through the company’s own catalog, web site, and mall-based stores. In late 2004, Castanea invested alongside Dorset Capital, and began working with management to improve operational execution, expand the store base, and accelerate catalog and internet sales growth. From 2004 through 2006 revenue increased twenty percent and the company’s profitability tripled.

More information about Castanea Partners is available at www.castaneapartners.com.

Castanea Contact
Marion Schouten
617 630 2420

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