KPS To Raise $1B For Fund III

Firm Name: KPS Special Situations Funds

Fund Name: KPS Special Situations Fund III LP

Hard Cap: $1 billion

Status: Pre-marketing to existing LPs

New York-based turnaround firm KPS Special Situations Funds is looking to raise a new fund with a hard cap of $1 billion, Buyouts has learned from a KPS backer.

If it meets its cap, the new fund would be more than twice the size of the $404 million predecessor, KPS Special Situations Fund II LP, which was raised in 2002. And the likelihood of that happening looks pretty good. “Right now they’re [pre-marketing] the fund to existing investors and demand already exceeds $1 billion,” said the LP, who has spoken with KPS pros to discuss a re-up.

KPS has been on something of a liquidity role recently, announcing four exits within a span of five consecutive business days last month. These include the sales of AmeriCast Technologies to Castle Harlan for $110 million; Ebro Electronics GmbH & Co. KG to Nova Analytics Corp.; Speedline Technologies to Illinois Tool Works; and Wire Rope Corp. of America to Fox Paine & Co.

What’s more, the firm is touting the probability of another string of exits in the next six to 12 months in order to “excite their LPs,” the investor said. Calls to KPS were not returned by press time.

Past and current investors in KPS funds include the Amalgamated Cotton Garment & Allied Industries Fund, BellSouth Corp., the California Public Employees’ Retirement System (CalPERS), the Textile Workers Pension Fund, and the Washington State Investment Board, according to Thomson Financial, publisher of Buyouts.

Along with KPS, a number of general partners are looking to at least double the size of their current funds. Those that fit the bill include Leonard Green & Partners, which is raising Green Equity Investors V LP with a $5 billion hard cap to replace its $1.85 billion fourth fund; and Sun Capital Partners, which is in the market with a $3 billion-targeted Sun Capital Partners V LP to pick up where its $1.5 billion predecessor leaves off.—A.N.