Food-focused private equity firm raises $890 million

by Josh Sosland
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New French Bakery, Arbor Investments
New French Bakery, Inc. is one grain-based foods company in the Arbor portfolio.

CHICAGO — Arbor Investments has raised $765 million for its fourth private equity fund focused on the food, beverage and related industries. In addition to the close of Arbor Investments IV, L.P., the firm announced $125 million has been raised for its first captive subordinated debt fund, Arbor Debt Opportunities Fund I, L.P.

Arbor said both funds were “significantly oversubscribed” and closed on July 7.

Established in 1999, Arbor has invested in a diversified collection of companies in the baked foods, frozen foods, dairy, protein, food service equipment, bottling, ethnic food, kitchenware, ingredient, packaging and distribution segments.

Arbor said it will follow the same investment strategy in Fund IV that has guided the firm previously.

“This strategy consists of making conviction private equity investments in reasonably valued, high quality middle market food and beverage companies that exhibit the potential for substantial capital appreciation through improved financial performance and enhanced strategic positioning,” Arbor said.

Gold Standard Baking, Arbor Investments
Last year, Arbor was accorded the “Deal of the Year” award by Buyouts magazine for Gold Standard Baking.
For its investment in and sale of Great Kitchens Inc., Arbor was accorded the “Deal of the Year” award by Buyouts magazine in 2011. Last year, the firm was given the award for Gold Standard Baking.
 
The new debt fund was raised as a source of subordinated debt for Fund IV portfolio companies.
 
“Arbor believes that DOF I will substantially enhance Fund IV’s ability to structure and execute platform investments while preserving equity upside and providing a new investment vehicle for investors to obtain an attractive risk-adjusted investment return,” Arbor said.
 
Gregory Purcell, Arbor Investments
Gregory Purcell, c.e.o. of Arbor
Gregory J. Purcell, Arbor’s chief executive officer, said investments for the new funds were raised in 90 days.

“We believe that the attractive dynamics in the food and beverage sector contribute to an excellent investment environment, and we look forward to investing Fund IV and DOF I and continuing to deliver exceptional returns for our limited partners,” he said.

Since 1999, Arbor has invested in over 44 food, beverage and related companies in North America. Combined, the companies generate more than $2 billion in revenue annually.

PBF Pita Bread Factory, Arbor Investments
PBF Pita Bread Factory Ltd. is part of Arbor's grain-based foods portfolio.

Grain-based foods companies that are or have been in the Arbor portfolio include Gold Standard Baking, Inc. (exited); South Coast Baking, L.L.C.; New French Bakery, Inc.; PBF Pita Bread Factory Ltd.; Oven Fresh Baking Company, Inc. (exited); Hudson Baking Co. L.L.C.; Best Maid Cookie Co., Inc.; Great Kitchens, Inc. (exited); Shawnee Quality Snacks, Inc.; and Texas Premium Foods and Distributing.

Shannon Advisors acted as placement agent for the funds and DLA Piper L.L.P. (US) served as fund legal counsel.
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