The Sterling Group has held an oversubscribed, above target and hard cap close of its sixth fund, Sterling Group Partners VI LP, with $3.5 billion of capital. Sterling’s earlier fund closed in June 2020 with $2.0 billion of capital.
The majority of Fund VI’s capital was provided by returning limited partners and includes several new investors that expand the firm’s limited partner base in the United States, Europe, the Middle East and Asia.
The Sterling Group invests in manufacturing, industrial services and distribution companies, typically corporate carve-outs and family businesses, which have enterprise values from $100 million to $750 million. The Houston-headquartered firm emphasizes an operational approach in partnership with management teams to grow and improve the companies it acquires.
Since its founding in 1982, The Sterling Group has sponsored the buyout of 71 platform companies and numerous add-on acquisitions with a total transaction value of over $24 billion. Sterling’s partner group, including Greg Elliott, Brian Henry, Scott MacLaren, Brad Staller, Kent Wallace, Jim Apple, Franny Jones and Jud Morrison, have a collective 100-plus years working at Sterling.
“Sterling has a four-decade track record of value creation across the economic cycle,” said Ms. Jones. “The secular tailwinds underpinning today’s industrial middle market, when combined with our proven Seven Lever value creation strategy, present tremendous opportunities for Fund VI.” Sterling’s “Seven Levers” codifies the firm’s experiences in seven specific areas of continuous operational improvement.
Recent transaction activity for Sterling has been dominated by several add-on acquisitions including Frontline Road Safety’s December 2023 buy of Aero-Mark Company, an Ohio-based provider of pavement marking services to state DOTs and general contractors. The buy of Aero-Mark is Frontline’s twelfth add-acquisition since the company was established in July 2020.
In November 2023, West Star Aviation, a southern Illinois-based provider of maintenance, repair, and overhaul (MRO) services to the business aviation industry, added on with the $131 million buy of Jet East, an Ohio-based provider of aircraft MRO services. Sterling acquired West Star in March 2022 from Norwest Equity Partners. Earlier still, in September 2023, Sterling’s Fencing Supply Group acquired Atlantic Fence Supply, a Virginia-based wholesale distributor of ornamental, vinyl, wood, and chain link fencing. Fencing Supply Group was formed by Sterling in February 2021 to acquire Merchants Metals, a distributor of fence supplies with 35 branches and 4 manufacturing facilities across 28 states.
Evercore’s private funds group was the placement agent on this fundraise and Kirkland & Ellis provided legal services.
© 2024 Private Equity Professional | April 26, 2024
