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KPS to raise $1B

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

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

KPS has announced four exits within a span of five consecutive business days in December. 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.

The firm will likely have another string of exits in the next six to 12 months to “excite their LPs,” the source said. Calls to KPS were not returned.

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

In addition to KPS, other turnaround firms are looking to at least double the size of their current funds. They include Leonard Green & Partners, which is raising Green Equity Investors V 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, double its $1.5 billion predecessor. —Ari Nathanson