Core Industrial Partners, a Chicago-based middle market private equity firm, has raised $887 million across two new funds that it sees opportunities for deploying in and around a recently established beachhead in Northeast Ohio.
Founded in 2017, Core — an acronym that stands for collaboration, outperformance, respect and ethics — quietly established a Cleveland-area office in March 2023 at the Pinecrest development in Orange Village. The firm also has a team in Austin, Texas.
In general, Core tends to pursue majority acquisitions in lower middle market companies in sectors like manufacturing, industrial technology and industrial services.
According to its investment criteria, Core's preferred targets are businesses with up to $200 million in revenue or $25 million in earnings before interest, taxes, depreciation and amortization (EBITDA). Its holdings include a majority share of Fathom Digital Manufacturing Corp., a Wisconsin-based additive manufacturing company.
Running Core's Ohio cohort is a small team led by Jason Fulton, a partner who joined the firm in August 2022 following 11 years with The Riverside Co. There, he supported the firm's Capital Appreciation Fund, pursuing investments in a variety of service-oriented businesses.
As far as the motivation for Core to establish an office in this region, Fulton told Crain's Cleveland Business, "We have always viewed Cleveland as a critical office location as it is the gateway to the Rust Belt, which serves our strategy quite well, especially for the family-owned and founder-led businesses that we typically acquire."
"With its rich history of industrial activity and continued importance in the Midwest," he added, "Cleveland serves as an ideal hub for Core to invest behind leading industrial services businesses that have between $3 million and $15 million of EBITDA."
Other members of Core's Cleveland cohort include: Vice President Ben Benita, whose experience prior to joining CORE in 2022 includes work for iCON Infrastructure, Spire Capital Partners and Barclays; Ryan Fuchs, an associate who joined Core in October 2023 following posts at Piper Sandler and Schwartz Heslin Group; and Dawn Biggs, an executive assistant who previously filled a similar role at Beachwood's MCM Capital Partners.
Core recently announced the closing of its two latest funds with capital commitments totaling $685 million for its Core Industrial Partners Fund III—the latest iteration of its flagship fund — and $202 million for its new offering, Core Industrial Services Fund I.
The firm says that both of those exceeded their target funding goals, though it declined to note by how much.
"We are extremely proud and humbled by the strong interest and support from both existing and new investors and are grateful for the trust they have shown in us," John May, Core managing partner, said in a statement. "The unwavering support for both fund strategies highlights our dedication to an industrial sector we believe is experiencing significant long-term tailwinds. We remain committed to taking advantage of these opportunities and working hard for our limited partners."
Core notes that while Fund III will continue to focus on acquisitions of manufacturing and industrial technology businesses, the Industrial Services Fund "brings a more concentrated focus to the highly fragmented industrial services sector that Core believes is experiencing strong growth due to reshoring and proliferation of advanced technologies with the adoption of Industry 4.0 applications in North America."
"We bifurcate the two funds based on the investment focus: manufacturing and industrial technology or industrial services," Fulton said. "Both funds see Ohio and the surrounding markets to be highly attractive geographies for the types of investments that we are targeting."
The firm said it plans to make between seven to nine platform investments with the capital in its flagship fund strategy and around six to eight platform investments from the carve out focused on industrial services.
Building on that, Fulton said that the typical cash investment for platforms backed by the former fund could be up to $100 million — including initial platform investment and add-ons — and between $25 million to $50 million for platforms backed through the latter.
Core's Fathom holding includes an injection molding operation in Holland, Ohio. On Feb. 20, Fathom filed documents with the Securities and Exchange Commission saying it will be going private under a deal with Core. Core currently owns 63 percent of Fathom.
The expectation is that more deals could be made in and around this market by the firm in the future, as Fulton alluded to.
Core currently has 33 employees across all operations. Following these new fundraises, the company said that it plans to add 15 to 20 more people over the next two years. Some of those hires will be made in Northeast Ohio.
"We foresee continuing to grow the Industrial Services team, particularly within Cleveland — as Core continues to invest behind successful industrial services companies out of our $202 million fund—with at least four new hires added to the Cleveland office, which would include investment and operating partner professionals," Fulton said.