GI Partners nears close of third fund

GI Partners is set to soon close its third fund earmarked for mid-sized, asset-rich companies based in the United States and Europe. The final tally of the fund is expected to be at least $2 billion.

Rick Magnuson, executive managing director at the firm, said that the fund should close within the next month. The firm announced in a recent press release that it has so far raised $2 billion. In June, PE Week reported that the Menlo Park, Calif.-based shop has secured $1.94 billion for GI Partners Fund III, which was targeted at $2.25 billion.

Fund II closed in 2006 with commitments of $1.45 billion.

Limited partners in the third fund include the Los Angeles Fire and Police Pension System, the Teachers’ Retirement System of Illinois and the California Public Employees’ Retirement System. CalPERS has been an anchor LP for the firm in the past, providing 95% of the capital for its first fund, a $500 million pledge, which it also matched for the second pool.

GI Partners reportedly picked up a number of new domestic investors while raising its third fund, but was not as successful in trying to tap sovereign wealth funds.

“That really has to do with the fact that during the time we were marketing, we were competing with commercial banks and investment banks that were trying to recapitalize and were raising billions of dollars from sovereign wealth funds,” Magnuson said. “And of course I think all of us who are middle-market firms were outgunned by the U.S. financial system recapitalizing at the same time.”

GI Partners, which also has an office in London, makes equity and debt investments of between $25 million and $250 million, engaging in traditional buyouts, platform deals, management turnarounds, and direct asset purchases. Sectors of interest include health care, real estate, hospitality, retail, logistics, transportation, media, entertainment, financial services, technology and telecom.

Magnuson founded GI Partners in 2000. Prior to that, he was a deputy partner with Nomura Group’s Principal Finance Group in London. Members of the group that formed GI Partners, formerly called Global Innovation Partners, have invested together since 1994. —Bernard Vaughan