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KSL Capital To Close Fund At $2B Hard Cap

Firm: KSL Capital Partners LLC

Funds: KSL Capital Partners III LP

Target: $1.5 billion, $2 billion hard cap

Placement Agent: Probitas Partners

KSL Capital Partners LLC is preparing to close its latest buyout fund in June with $2 billion in commitments, a source familiar with the fundraising effort told Buyouts.

The fund close is notable considering the difficulties many firms are having raising capital and for the fact that KSL Capital was only founded in 2005.

The Denver-based firm had been seeking $1.5 billion for KSL Capital Partners III LP, with a $2 billion hard cap. The firm is awaiting the final sign-off from two limited partners before closing the fund, the source said.

Loyal backers include the Washington State Investment Board, which last November approved a commitment of up to $200 million. Washington Sate also committed $100 million to KSL Capital Partners II LP in 2006, which secured more than $1 billion in commitments; Washington also $50 million to a supplemental fund the firm raised in 2009, as Buyouts previously reported. Texas County & District Retirement System said it made a $40 million commitment to Fund III.

KSL Capital is dedicated to buying companies involved in the travel and leisure industry, employing a hands-on approach involving re-positioning its companies with organic growth, cost-cutting and new marketing strategies. The idea is to first organically increase the company’s cash flow, while evaluating growth through add-on acquisitions and other opportunities, according to the firm’s Web site. In its most recent deal, in April, the firm bought The Royal Palm Hotel in Miami’s South Beach area for $130 million.

Managing Directors Michael Shannon and Eric Resnick founded KSL Capital in 2005, after collaborating for several years as executives at KSL Recreation Corp., a resort management company that owns resorts, spas, golf courses and other resorts. Principals at KSL Capital include Martin Newburger, who before joining the firm in 2006 focused on lodging and leisure investment banking clients as a director at Citigroup and Deutsche Bank; and Bernard Siegel, who before joining the firm in 2006 worked for 22 years in the hospitality industry, most recently as the executive vice president of Lowe Hospitality Group.

As of Sept. 30, 2010, Washington State’s commitment to KSL Capital Partners II had generated a 1.1x investment multiple and a net internal rate of return of 9.69 percent.