Highland Capital delays fund close

Highland Capital Partners has pushed back the first close for its eighth venture fund from the end of June to mid-July, according to multiple LP sources.

The Lexington, Mass.-based firm also has reduced the fund’s carried interest from 25% to 20 percent.

A Highland spokesman did not return calls for comment.

Highland began marketing in early spring with a $400 million target, which was just half of the $800 million it raised for each of its prior two funds. The goal seemed to make sense, given the deflated fund-raising and deal-making environments. If things turn around, the firm can always return to market and raise additional funds.

However, a lowered target has not translated into a swiftly raised fund.

None of this is to say that Highland won’t get the fund raised. Sources indicate that there are about $300 million in soft and hard commitments so far.

Highland’s experience is just further evidence that the fund-raising market is difficult.

The firm’s recent returns aren’t exceptional, but they also aren’t horrible. Its sixth fund, raised in 2001, had an IRR of 8% as of Dec. 31, compared to a Cambridge Associates benchmark of 0.49 percent. Its fifth fund, raised in 2000, is underperforming at -2.9% compared to an industry benchmark of -1.39 percent. Its seventh fund, raised in 2006, is struggling at -16.1%, in large part due to participation in the buyout of Harrah’s Entertainment Inc., but is still less than 50% called down. —Dan Primack