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Keystone Ramps Up For Second Fund

Fund-of-funds manager Keystone National Group LLC 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 LP

is slated to debut in mid-2008, according to a source familiar with the firm. A target has not been determined yet. In mid-November, the Scottsdale, Ariz.-based firm announced that it held a final close on approximately $75 million for its maiden fund, Keystone Private Equity LP.

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, ranging from $100 million to $400 million in size. The firm held rolling closes on the fund so it could begin investing before the final close, said Brandon Nielson, a managing partner and co-founder of the firm. So far, Keystone Private Equity LP has committed to eight buyout funds and will be deployed in 12 to 15 funds in total. Commitments have been made to four small buyout funds, two large buyout vehicles, one middle-market fund and a growth equity fund.

The fund-of-funds manager was co-founded in 2006 by John Earl, formerly an investment banker with Lehman Brothers; Nielson, 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: VistaCare Inc., a venture-capital funded health care company and ValueRx Inc., a pharmacy benefit management company.—J.P.