Fund Closes – Pegasus Fund Set To Close in March –

Since June, Pegasus Partners LP has raised $540 million for its second buyout fund, and the firm expects to hold a final close of Pegasus Partners II LP on $560 million to $570 million no later than March, said a source close to the firm.

Fund II was launched in June 1999 with a target of $500 million, a figure more than double the size of Pegasus’ first buyout fund.

The source said about 40% of limited partners signed up thus far are return investors from the previous fund.

Partners set to manage the fund will be Pegasus co-founders Craig Cogut and Rodney Cohen, and partners Jonathan Berger, David Uri, and Andy Bursky, who replaced Joshua Brain in June.

The source said the firm will employ the same investment strategy it used for its first fund. Pegasus looks to invest in distressed companies.

Pegasus’ placement agent for the fund, Kevin Albert of Merrill Lynch, said the departure of Brain last year was immaterial, noting that the firm’s investment strategy and Cogut’s track record while at Apollo Management LP are the big selling points for investors. “Craig is definitely the rock star of the group,” Albert said.

“Being a value investor is not currently en vogue,” Cogut said. “But our investors obviously believe in it.”

No deals have been made with Fund II, but the source said Pegasus is close to making its first deal under the fund, details of which will be made available when the final close is announced.

Limited partners that committed to the first Pegasus fund include Chancellor LGT Asset Management, GE Capital, Goldman, Sachs & Co. and Wilshire Associates.

Merrill Lynch served as the placement agent.