Financial Services Firm Closes In On $800M Target

Firm: Lightyear Capital LLC

Fund: Lightyear Fund III LP

Target: $800 million, $1.1 billion hard cap

Amount raised: $653.8 million

Placement Agent: UBS Securities LLC

Lightyear Capital LLC, the buyout firm founded by former Paine Webber Group Inc. CEO Don Marron, is closing in on its fundraising target for its third fund, a source close to the effort told Buyouts.

Lightyear has raised about $653.8 million and has about $700 million when including personal commitments from its executives, the source said. The firm is trying to raise $800 million, but will raise as much as $1.1 billion if there is enough demand.

UBS Securities LLC is helping the firm raise the money.

Marron launched Lightyear in 2000, after UBS bought Paine Webber. The firm is solely focused on buying companies in the financial services industry. In 2002, it raised $750 million for its debut fund, and followed that up with an $850 million second fund in 2007. It has close to 20 investment professionals.

The firm appears to have made substantial progress with the fundraising in the last six months, as Buyouts reported in March that it held a first close of $150 million. This despite the fact that volatile global markets appears to have spooked many pensions, endowments and other fund investors. U.S. buyout and mezzanine funds raised $16.0 billion in the third quarter, a 42 percent slowdown from the $27.8 billion that was raised in the second quarter, according to data compiled by Buyouts. The tally is also 36 percent less than the $24.1 billion that was raised in the third quarter of 2010.

Prior investors in Lightyear’s funds have included UBS, Caisse de Dépot et Placement du Québec, the Canada Pension Plan Investment Board, General Electric, NB Private Equity Partners Ltd and Yasuda Mutual Life Insurance Co.

Recent Lightyear deals include its acquisition of Clarion Partners, ING Group’s U.S.-based real estate investment manager, for $100 million, which closed in June. On the sale side, in June it sold BakerCorp., a company that rents out large tanks, boxes and other specialty equipment used in the manufacturing, chemical and other industries to European buyout firm Permira for $960 million.