Gores surpasses $1B mark for third fund

The Gores Group recently received a $75 million pledge from the San Diego County Retirement Association for its third fund, even though the county pension fund noted the “potential for headline risk” in a May board document.

Launched in early 2009, Gores Capital Partners III has grown to more than $1 billion; it has a target of $1.5 billion and a hard cap of $2 billion.

The firm raised $1.3 billion for its second fund, which closed in 2007. As of March 2010, the second fund had been used to make seven investments totaling more than $687 million.

The Los Angeles-based buyout shop invests in technology, telecommunications, industrial and business services, as well as media, health care and security. The firm takes control stakes in mid-market business, and is expected to invest in 12 to 20 portfolio companies with the capital raised for fund III by cutting checks of $50 million to $250 million.

The fund’s management fees during the investment period are 1.85% of commitments and after that, 1.5% of active investments. The general partner will receive 20% of the carried interest.

In addition to San Diego County, other limited partners include the Massachusetts Pension Reserves Investment Management and the Teacher Retirement System of Texas, as well as funds of funds and corporate pensions.

A county pension fund document indicates that the board has some modest concern about the high profile maintained by founder Alec Gores.

“Alec Gores and some relatives have attracted some media attention, possibly because of Mr. Gores’ being a successful businessman based in the Beverly Hills area,” the document said. “However, there is no evidence that any media publicity has affected the investment capabilities of The Gores Group or Mr. Gores himself.”

That said, the limelight has found the Gores family, especially during a 2008 scandal involving an affair between Gores’ then-wife, Lisa Gores, and his brother, Tom Gores, the head of Platinum Equity. The affair was revealed during the trial of former private detective Anthony Pellicano, who had illegally employed the use of a wire tap after he was hired by Alec Gores to investigate his wife. It appears, however, that the affair did not have a lasting effect on the brothers’ ability to work together. In April, they teamed up to make a bid for Miramax Films, which is being sold by Walt Disney Co.

Alec Gores founded the firm in 1987. Outside of Los Angeles, the firm also has offices in Boulder, Colo., and London. —Nancy Gordon