Avista Capital Crawling Toward Fund Close

Firm: Avista Capital Partners

Fund: Avista Capital Partners II LP

Amount Raised: $1.08 billion

Target: $2 billion to $3 billion

Fourteen months ago Avista Capital Partners held a first closing on approximately $1 billion of capital commitments for its second buyout fund. Things don’t seem to have changed much in the interim, according to an SEC filing that shows just $1.08 billion banked.

In the fall of 2009, reports circled that New York-based Avista Capital was planning to hold a final close on Avista Capital Partners II LP at between $2 billion and $3 billion for March 2010. That goal was more flexible than the firm’s original $3 billion target; the recent filing suggests a $2.5 billion target.

The slow fundraising pace is a new thing for the young firm. Avista Capital’s first fund, a $1.5 billion pool, made a big, oversubscribed splash in its 2007 debut. As a spinout of DLJ Merchant Banking Partners, Avista Capital had notably scored backing from former parent company Credit Suisse, something fellow DLJ spinoff Diamond Castle Partners did not. Avista Capital also had no problem spending its take, having deployed 90 percent of its capital in less than one year.

The company’s most widely reported misstep, the acquisition of now-bankrupt Minneapolis Star Tribune, may be causing some of the fundraising pain. Avista Capital lost all of its $105 million equity investment in the newspaper publisher’s Chapter 11 filing last year.

Avista Capital paid around 7x to 8x cash flow for the company in 2007, which at the time seemed like a bargain compared with competitors trading at 10x to 13x cash flow. In a completely different media landscape today, those companies now trade closer to 5x cash flow.