Keystone makes plans for fund II

Fund of funds manager Keystone National Group has firmed up plans to launch its second fund earmarked to back limited partnerships aimed at small and middle-market buyouts.

Keystone Private Equity II is slated to debut in mid-2008, according to a source familiar with the firm. A target amount has not been determined yet.

In mid-November, the Scottsdale, Ariz.-based firm announced that it held a final close on about $75 million in commitments for its inaugural fund. High net-worth families, C-level executives and foundations comprised the bulk of the fund’s 35 investors, according to a press release.

Half of the fund’s commitments are earmarked for small buyout funds, which range in size from $100 million to $400 million. The firm held rolling closes on the fund so it could begin investing before the final close, says Brandon Nielson, managing partner and co-founder of the firm.

The maiden fund has already committed to eight buyout funds and will be deployed in 12 to 15 funds wheb fully invested. Commitments have been made to four small buyout funds, two large buyout vehicles, one middle-market fund and a growth equity fund, Nielson says.

John Earl, formerly an investment banker with Lehman Brothers, co-founded the firm last year with Nielson, who was previously a managing director at Regional Investment Partners, a private equity research firm, and Barry Smith, who has served as chairman and CEO of two private-equity backed companies. —Joshua Payne