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Greenhill Spinout Eyes Second Close On Fund III

Firm: GCP Capital Partners

Fund: GCP Capital Partners III LP

Target: $700 million

Placement Agent: Greenhill & Co. fund placement advisory group

GCP Capital Partners expects to hold a second close on an additional $100 million for its third fund by the end of the second quarter, a source with direct knowledge of the fundraising effort told Buyouts.

In November the firm, formerly known as Greeenhill Capital Partners, held a first close of $200 million on the fund, GCP Capital Partners III LP. The former investment arm of advisory firm Greenhill & Co. is trying to raise $700 million for the fund.

The firm typically writes equity checks of $10 million to $75 million per transaction, targeting companies in the business services, financial services, education, energy, insurance and telecommunications sectors. Target companies usually have enterprise values of $50 million to $500 million.

GCP Capital originally had planned to begin raising capital in January 2009, but like many buyout shops shelved the effort during the economic downturn.

The firm raised $875 million in 2005 for its second fund, which has achieved a net investment multiple of 2x and a net IRR to investors of more than 30 percent, our source said.

GCP Capital’s most recent investment came in December, when it invested $23 million in ClearView Risk Holdings LLC, a Dallas-based wholesale insurance brokerage.

On the exit side, the firm generated a good return back in September when New Mountain Capital purchased 50 percent of Stroz Friedberg, a New York-based technical consulting and services company, from its senior management and GCP Capital for $115 million. GCP Capital sold half of its stake in Stroz Friedberg for $55 million, earning a return of 3x on half of its $37 million original investment, while continuing to own a 22 percent ownership stake in the company.