In Q2 2001, gun-shy LPs forced many buyout funds to hold premature closes. This past quarter, however, buyout investors were more receptive to new offerings, and many funds found themselves oversubscribed.
According to target=new>Buyouts newsletter, buyout shops raised $6.8 billion in Q3, which is about $1 billion less than what was raised in the previous quarter. Among the quarter’s winners were the Quadrangle Group; Greenbriar Equity Partners; New Mountain Partners; American Securities Partners; Parthenon Investors; Morgenthaler; and Broackway, Moran & Partners.
In the current fundraising environment, general partners attribute experience, track record, and the loyalty of their limited partners base to their successful fund-raising campaigns. Peter Brockway said his firm’s relationship with its LPs accounted for its short campaign. Brockway Moran Partners Fund II LP, which closed on Sept. 28th on $410 million, took only three months to complete.
Aside from relationships, firms such as a Greenbriar Equity Group and Quadrangle found that a market niche and a track record also played into the hearts, and pockets, of their LPs. Greenbriar’s LPs were drawn to the firm’s transportation focus vehicle and pumped in $700 million for the fund. Joel Beckman, Jerry Greenwald, and Regg Jones formed Greenbriar last year to invest alongside Berkshire Partners in the transportation market. Quadrangle’s media and communications focused fund drew the attention of its own LPs to the tune of $1.8 billion for its maiden vehicle.
More recently, San Francisco-based Fremont Partners held a first close on $859 million for its third fund Fremont Partners III, which had a target of $850 million. The firm plans to hold a final close in December of between $900 million and $925 million. The partners at Fremont said that its LP base were excited about the fund because of its middle-market, opportunistic approach towards investments, as well as the fact that it offered them co-investment opportunities. “Co-investment opportunities are very important to LPs in today’s market,” said Mark Williamson, a managing director at Fremont Partners.
Hung Tran can be contacted at Hung.Tran@tfn.com
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