September 18, 2002 by Randy Whitestone Bloomberg TSG Consumer Partners, a private-equity investor in consumer-products companies and brands including Famous Amos cookies, has raised a $500 million fund for acquisitions. Started in 1987 by former Shaklee Corp. Chief Executive Officer J. Gary Shansby and former Bain & Co. consultant Charles H. Esserman, the company originally sought $400 million for the partnership, TSG4 LP. The firm said it had annual returns before fees of 61 percent since 1988. "There's a lot of consolidation in companies and we like to buy orphan brands," Shansby said in an interview. The firm sold Famous Amos in 1992 to Taiwan's President Enterprises Corp. for $61 million, 20 times its original investment. The new fund comes as industrywide money-gathering efforts have slowed. Private-equity funds raised $18 billion in the first half of 2002, down from $60.6 billion in the first half of 2001, as firms focused on bolstering troubled older holdings and slowed new investments, according to the National Venture Capital Association. As asset prices decline, firms have stepped up their spending to $41.5 billion this year through mid-September, more than double the year-earlier figure, according to Bloomberg data. They have an estimated $100 billion in uncommitted capital. "It's very hot right now," Shansby said. TSG Consumer Partners last year acquired the Spic and Span and Cinch cleaner brands from Procter & Gamble Co. Prior investments include Mauna Loa macadamia nuts; Famous Amos, now part of Kellogg Co.'s Keebler Foods Co.; Terra Chips; La Victoria Foods; Met-Rx Nutrition; Medtech Products; and Cutex nail-polish removers. Limited partners in TSG4 include state and corporate pension funds, including retirement systems for Colorado, Michigan and New York, as well as other private-equity investment funds, and wealthy individuals. Credit Suisse First Boston acted as placement agent for the partnership. The firm has had about 36 profitable investments out of 40 since 1988, Shansby said. One loss came on a transaction with the Mayo Clinic to develop its non-medical services businesses. TSG Consumer Partners, which aims to put $25 million to $50 million of equity into $100 million to $150 million transactions, is looking at acquisitions in frozen and refrigerated foods, beverages, and personal-care products, said Gary Shansby. "We see about 1,000 deals a year by calling on 60 corporations and using finders and brokers," he said. "I don't say we don't have any competition on our deals, we just don't run into other people." TSG Consumer Partners executives include former investment bankers Scott Elaine Case of Deutsche Bank, Alex Panos of Bear Stearns Cos., and Michael Mauze of Lehman Brothers. The company builds industry teams of executives who remain with TSG Consumer Partners, in place for the next acquisition, when a portfolio company is sold. The latest fund is more than triple the size of its previous $155 million pool. The firm has now raised a total of $773 million since its inception. Copyright © 2008 TSG Consumer Partners. All Rights Reserved.