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January 06, 2010

Prophet Wins Investor Faith

Turnaround shop Prophet Equity has held a final close for its debut fund, at the vehicle’s $250 million capital-raising limit. The results represent a rare triumph in today’s market, as first-time managers in particular have found it difficult to raise capital ever since the global financial crisis took hold in 2007. In fact, Prophet even had to squeeze out some limited partners as existing backers boosted their commitments after its annual investor meeting in November.

Prophet’s fund met with strong demand from the mid-2008 start of its marketing campaign. It held its first close that December with $135 million, with its seventh and final close coming a year later. However, that was still about six months later than planned.

On top of what was raised from outside backers, Prophet and its staff have committed $20 million to the new vehicle and have the right to increase their pledges to as much as $50 million.

The firm has completed three deals so far, buying emergency- response equipment companies Chief Supply and Law Enforcement Supply in October and loudspeaker maker Altec Lansing in December. Two more investments are pending, including a purchase of publicly traded Silicon Storage Technologies.

Prophet was founded in 2007 by Ross Gatlin, formerly of Insight Equity. The 14-person shop, based in Southlake, Texas, focuses on investing in distressed businesses valued at up to $250 million that can increase cashflows through operational improvements.

Featured in Private Equity Insider, January 6, 2010.

Edited by webmaster

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