Firms & Funds

Kainos Capital Fund II hits hard cap in 7 months: source

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Kainos Capital, Sarah Bradley, private equity, consumer, Dallas, Canada Pension Plan Investment Board
Kainos Capital co-founder Sarah Bradley. Photo courtesy of the firm.
  • Firm: Kainos Capital
  • Fund: Kainos Capital Fund II
  • Target: $750 mln
  • Hard Cap: $895 mln
  • Amount Raised: $895 mln
  • Placement Agent: Lazard
  • Legal Counsel: Weil, Gotshal & Manges LLP and Sidley Austin LLP

Kainos Capital in about seven months hit the hard cap of its sophomore fund with $895 million in commitments, including support from its anchor investor, Canada Pension Plan Investment Board, according to a source.

The consumer-focused Dallas firm’s relatively quick deployment of its $475 million fund in solid companies, despite frothy market conditions, contributed to its fundraising success, the source said.

It’ll keep the sweet spot for its portfolio-company sizes about the same, the source said. But the fund’s larger size will give it flexibility for more add-on deals while expanding the universe of companies to pursue, ranging from $10 million to $75 million of EBITDA, the source said. The firm plans to start tapping Fund II in a few months, the source said.

Sarah Bradley, partner and co-founder of the firm, declined to comment on deal sizes or the speed of the firm’s fundraising process.

“If we can find companies offering health and wellness, as well as meeting the need for value and then convenience thrown on top of that, it’s a trifecta,” Bradley said.

For deal-making in the consumer sector, Kainos remains mindful of the bifurcated nature of the North American economy, with demand at the high end and the value side at the same time, Bradley said.

Currently in the Kainos portfolio: JTM Foods, a maker of hand-held snack pies, provides a value proposition to consumers, while companies like Kettle Cuisine, which produces soups for restaurants, foodservice operators and grocery retailers, appeal to a higher-end target.

The firm has had two exits from Fund I: InterHealth Nutraceuticals for $300 million to buyer Lonza. The deal closed in September. It also sold Fempro to First Quality in 2015. Those terms weren’t disclosed.

Kainos has also been beefing up its ranks. In January Jay Desai was named head of business development. In 2015, the firm named Kevin Elliott a partner. Also last year, the firm promoted Daniel Hopkin and Nirav Shah to partners from principals. The firm now has six partners, up from the three founding partners including Bradley, Andrew Rosen and Bob Sperry.

Kainos was born in 2012 as a spin-off focused on food and consumer products from the former HM Capital, with backing from CPPIB.

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Photo of Sarah Bradley courtesy of Kainos Capital