Rockbridge Growth Equity, a Detroit-based middle market private equity firm , completed a transaction in which a consortium of blue-chip institutional investors agreed to acquire an interest in four existing portfolio companies and seed new platform investments.
Rockbridge will continue to manage the four businesses through a newly-formed continuation fund vehicle, RB Equity Fund I, L.P. (“Fund I”). StepStone Group led the transaction. The consortium of institutional investors also included Aberdeen Standard Investments, HSBC, Lexington Partners and LGT Capital Partners.
In addition, Rockbridge has established RB Equity Fund II, L.P. (“Fund II”), a newly-formed fund to continue Rockbridge’s strategy of making control and minority equity investments in lower middle market services businesses headquartered in North America. The initial Fund II investors are the Fund I investors and an investment entity affiliated with Dan Gilbert, which will become a Special Limited Partner in Fund II. Fund II will continue to target growth-oriented investments across four core industry verticals, including Digital Media & E-commerce, Technology-enabled Products and Services, Fintech and Consumer Services.
Rockbridge was established in 2007 by Brian Hermelin and Kevin Prokop, in partnership with Dan Gilbert. Since its inception, Rockbridge and its affiliates have deployed approximately $590 million across 13 platform investments. Rockbridge invests in fast-growing service businesses that can benefit from Rockbridge’s operational skills and its collaboration with the Rock Family of Companies, including Quicken Loans and more than 100 other businesses.
Brian Hermelin, Co-Founder of Rockbridge Growth Equity, said, “We are excited to have the support of our strong group of institutional investors as we enter a new phase in the evolution of our firm.” Co-Founder, Kevin Prokop, added, “Our vision has always been to create a leading private equity firm based in Detroit focused on investing in fast-growing services businesses across North America. This transaction is a big step in reaching that vision.”
“We are thrilled to be in partnership with Rockbridge as the team enters the next leg of its development. Brian, Kevin and the Rockbridge team have demonstrated an ability to find and develop attractive lower middle market growth companies, which is reflected in the high quality and momentum of the Fund I investments. StepStone’s experience in similar strategic and bespoke secondary transactions bolsters our confidence in the Rockbridge team and assets,” said Thomas Bradley, Partner & Co-Head of Private Equity Secondaries at StepStone Group.
Rockbridge was advised on the transaction by Lazard’s Private Capital Advisory team, which is also acting as placement agent for Fund II. Rockbridge received legal representation from Honigman LLP and Kirkland & Ellis LLP. StepStone Group was advised by Ropes & Gray LLP.