Dallas’ Sole Source Capital Raises $555M for Its Second Industrial-Focused Fund

With the "significantly oversubscribed" fund round, Sole Source now has over $1 billion under management. It's already made investments in three portfolio companies through the new fund: Dallas Plastics, Peak Technologies, and I.D. Images. Founder and CEO David Fredston says his firm's "investment process and commitment to human capital can deliver great results."

Industrial isn’t the sexiest of sectors—but it attracts many suitors who desire value and growth over flash and splash. Just look at Dallas-based Sole Source Capital. Today it announced it has raised $555 million for its second industrial-focused fund, a significant oversubscription from its initial $400 million target. 

With the closing of SSC Partners II, Sole Source Capital now has more than $1 billion under management. 

Sole Source was founded in 2016 by CEO David Fredston. Since then, it has completed 24 transactions focused on driving “rapid value creation” in lower middle market companies. The firm operates out of its headquarters in Dallas’ Old Parkland campus, and also has offices in Santa Monica, California.

Its second fund alone has already completed 10 total transactions across three portfolio companies:

  • Dallas Plastics, a leading manufacturer of blown polyethylene film with printing, embossing, and other value-add capabilities, which was acquired by Sole Source in October 2020;
  • Peak Technologies, a leading IT services and hardware provider of supply chain automation solutions, acquired by Sole Source in April 2021; and
  • I.D. Images, a leading manufacturer of secondary labels, acquired by the firm in August 2021

Investors range from pension funds to hospitals to RIAs

Sole Source says that investors in its second fund include public and corporate pension funds, investment consultants, financial institutions, healthcare plans and hospitals, insurance companies, endowments and foundations, fund-of-funds, registered investment advisors (RIAs), and family offices from North America, Europe and Asia.

“We’re grateful to have garnered such strong support among our highly respected, global base of investors,” said Sumil Menon, head of investor relations for Sole Source Capital, in a statement.

“We believe Sole Source Capital’s investment process and commitment to human capital and data analytics can deliver great results,” added founder and CEO Fredston, “and we’re humbled to have our limited partners investing alongside us.”

Gibson Dunn LLP served as legal counsel for the fundraising round, and Eaton Partners, a Stifel company, served as the exclusive placement agent.

An Inc. “Top Founder-Friendly Investor”

Last October, Sole Source was named to Inc. Magazine’s list of Top 50 Founder-Friendly Private Equity Firms for 2020. The list honored the most founder-friendly PE firms that help founder-led businesses thrive—even in the face of unprecedented challenges like those raised by the COVID-19 pandemic.

Last week, Inc. expanded the list for 2021 to include venture capital firms—and Sole Source made the list once again.

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