St. Cloud Capital

Growth capital for businesses that larger funds overlook

St. Cloud Capital is a private investment firm based in Los Angeles, founded in 2001, that provides growth capital to American lower middle market companies. Its site says these are businesses that often fall below the radar of larger private equity firms and the wider capital markets. It has made eighty-three portfolio investments and is currently investing from its fourth fund, a small business investment company vehicle.

Debt, equity or both

The firm describes its approach as opportunistic and flexible. Investments are usually a combination of debt and equity, with the debt portion senior or junior, and they can sit alongside other investors. It supports a wide range of deals: expansion and growth capital, recapitalizations, refinancings, management buyouts, change of control transactions and strategic acquisitions. It can invest in control and non-control situations and can arrange larger financings through co-investors. The firm says it looks for strong management teams that have built a business with proven services or products and want non-dilutive capital to move from good to great.

Who it backs

Targets include companies owned by entrepreneurs or by private equity sponsors, closely held private companies and micro-cap public companies. The sectors where it says it has demonstrated experience are manufacturing, distribution, business services, logistics, consumer, healthcare and financial services. Its older profile lists portfolio companies such as the greeting and entertainment site JibJab, the equipment rental business BigRentz, the home care provider AleraCare, AutoReturn and Burke Williams.

Working with portfolio companies

St. Cloud tends to form close partnerships. Typically one or more of its principals or advisors sits on the portfolio company's board, and it adds consulting and advisory help where useful. The partners' backgrounds are in investment banking at firms including Bear Stearns and Jefferies, and they serve on a western regional committee at the Small Business Investor Alliance.

Referrals and commitments

The firm welcomes referrals from bankers, brokers, lenders, lawyers, accountants and consultants, and says information it receives is treated confidentially. A section of the site also describes its commitment to underserved businesses.

St. Cloud Capital is a US private investment firm. Its stored profile centres on two managing partners, Benjamin Hom and Kacy Rozelle, who sit on the investment committee and handle finding deals, carrying them out and monitoring the portfolio.

Services

• Deal sourcing and execution: the partners find and complete investments themselves.

• Portfolio monitoring: ongoing oversight of holdings, with board seats or observer roles.

• Board seats: the partners act as directors or observers at several portfolio companies.

Who it works with

Middle-market and lower-middle-market companies. Portfolio businesses named on the profile include JibJab, BigRentz, AleraCare, AutoReturn and Burke Williams.

Key facts

• Team background: investment banking at Bear Stearns, Jefferies and Houlihan Lokey
• Industry body: partners serve on the western regional committee of the Small Business Investor Alliance