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Sorenson Capital Partners has raised what some believe is the biggest pool of investment dollars ever amassed by a Utah private-equity firm.
The Lehi-based company accumulated $400 million between mid-September and the middle of December from more than 30 investors in Europe and the United States, outstripping the $250 million it raised for another Sorenson investment fund in 2004.
"From what I know of the other firms that are based here, that's clearly the largest closing of its kind," Brad Bertoch, president of the Wayne Brown Institute, a Salt Lake company that helps young businesses find capital, said Friday.
Investments will be restricted to private companies in Utah, Colorado, Arizona, Nevada and New Mexico. The companies typically will have revenues of $30 million to $300 million and are profitable, Sorenson executives said.
"What we target is a 25 percent annual rate of return, which actually in the private-equity industry is in the top quartile. We have greatly exceeded that in the [2004 Sorenson] fund," said Fraser Bullock, a Sorenson managing partner.
Bullock was the No. 2 man in the Salt Lake Organizing Committee, which put on the 2002 Winter Olympics, serving as chief operating officer and chief financial officer. Bullock replaced Mitt Romney as chief executive officer after the games ended and oversaw the distribution of its $100 million profit. Romney went on to be governor of Massachusetts and is running for president.
About half of the new fund's backers are Westerners, including the family of Utah billionaire James LeVoy Sorenson, which has the biggest stake. The rest live in other parts of the United States and in Europe. Most invested in the earlier fund.
"Only one or two investors did not re-up in this round," said Ron Mika, another Sorenson managing director, who held the same job at Bain Capital Partners, the Boston-based private-equity firm Romney founded in 1984.
Bertoch said Sorenson Capital Partners remains a relatively small private-equity firm. Still, raising $400 million in three months suggests much about Utah and Sorenson's executives, he said.
"Utah, which traditionally was the undiscovered country for deals, is now becoming the discovered country for capital," Bertoch said. "You get that kind of capital because you post great returns or have the prospect of great returns, not because you are a member of the Good Ol' Boys Club."
Sorenson required investors to put up a minimum of $1 million. Bullock said the fund will invest in traditional manufacturing and service businesses and, occasionally, a technology company. Owners of the companies typically are looking for equity firms to buy some or all of the equity they have built into their businesses.
Sorenson employees usually act as consultants to the companies and take seats on the boards of directors. Occasionally they step temporarily into executive roles.
Investments are held for about five years. Sorenson then recovers its money by taking the company public or selling its interest to other private buyers.
Bertoch said equity investments aren't as risky as venture capital investments into unproven startups because targeted companies usually are established and are profitable.