Gores Vets Mount Marlin Fundraising Drive –

When Gores Technology Group went into the market to raise its first institutional fund, investors were enamored with the firm’s track record. Successes such as the turnarounds of former Mattel albatross The Learning Company and Hewlett Packard’s electronic payment systems unit VeriFone ensured the fund would not be short of suitors.

Now, two years later, two former Gores pros are trotting out a similar prospectus, and could theoretically find the same kind of enthusiasm among LPs. David McGovern, who spent seven years at Gores as a managing director and head of mergers and acquisitions, along with Nicholas Kaiser, a former associate at Gores, have launched the inaugural fund from their new buyout shop, Marlin Equity. The fund, Marlin Equity LP, has already closed on $20 million, according to Form D filings submitted to the Securities and Exchange Commission.

An industry source has told Buyouts that the new group has already sent out PPMs to select institutional investors, including pensions, endowments and fund of funds. The firm is said to be seeking $60 million in total, and could close the fund by the end of July or early August.

While Gores Technology Group is known for buying companies on the cheap (the firm did not pay anything for either TLC or Micron), it primarily plays in the middle market, and targets businesses in the technology and telecom sectors. Marlin deviates from the Gores blueprint in that it will target businesses a notch below in size, focusing on the small and lower end of the middle market, and the firm also will not confine itself to technology. Like Gores, though, Marlin plans to pursue opportunities in out-of-favor areas of the economy and will seek out special situations, distressed buyouts and non-core businesses of larger companies.

The timing of Marlin’s inaugural fund comes at time when the fundraising market is at an absolute peak. There are currently more than 350 funds that have either closed this year or are in the process of seeking capital. In addition to the Marlin principals’ track record at Gores, the firm’s small market strategy should also be in demand as limiteds seek out the next emerging managers.

Marlin joins a growing list of new PE spinouts, including Michael Madden’s Centurion Capital Partners, Michael Presser’s Monomoy Capital, the Lawrence Schloss-led Diamond Castle Holdings and Donald Edwards’ Flexpoint Partners, which held its final close last quarter.

Gunderson Detmer is providing legal counsel on the fundraising drive.