Landmark Nears Close on $600M Fund

Stanley Alfeld, chairman and managing general partner of Landmark Partners, is planning to step down and enjoy his retirement soon.

But the firm he founded in 1984 is far from slowing down.

Landmark hopes to be the latest secondary buyer to close a large fund. The firm expects to close its new fund later this month. Landmark Equity Partners XI stands now at $470 million and it may reach reach $600 million in the next few weeks, says Partner Anthony Roscigno.

The spike in the fund’s size comes after a slow start. The Simsbury, Conn.-based firm began raising the fund in April 2002. Landmark raised $109 million by October 2002, according to federal filings. By last May, the fund size reached $221 million.

But, in the slow fund-raising environment of 2003, Landmark raised only about $260 million total by December.

Roscigno says that about 70% of the fund’s limited partners are returning LPs. He said that the firm did not shy away from any public LPs and added some new names.

He declined to name the firm’s new LPs. But limited partners in past Landmark funds include Allstate Insurance Co., BancBoston Investments, California Public Employees’ Retirement System, Cornell University, Franklin Life Insurance Co., Howard Hughes Medical Institute, IBM, Johnson & Johnson, Los Angeles County Employees’ Retirement Association, Pacific Mutual Life Insurance, Pennsylvania Public School Employees’ Retirement System, Pennsylvania State Employees’ Retirement System, Rockefeller University and SunAmerica.

So far the firm has closed on two deals from the fund. And Landmark took part with Goldman Sachs and Vision Capital in the partnership’s $189 million fund to manage the investment portfolio of CS Structured Credit Fund. That deal, announced last month, is a secondary buyout for a direct portfolio of companies. It marks the first time Landmark has participated in such a deal with Vision.

Landmark also expects to close on two more deals from its new fund within the next month.

While most of the capital being put to work on these deals is going to buyout interests, Roscigno says that Landmark has no asset preferences. “We have no sector allocations,” he says. “We’re very opportunistic.”

The firm’s last dedicated secondary fund, Landmark Equity Partners X, was an oversubscribed vehicle. Although the firm was expecting to raise approximately $400 million, the total capitalization of the fund was $583 million.

Landmark launched that fund in July 1999 and began making investments immediately after its June 2000 first close.

Secondary private equity investors raised more than $4.2 billion for new funds in 2003 and more than $5 billion in 2002, according to market researcher Thomson Venture Economics (publisher of PE Week). New York-based secondary advisory firm Columbia Strategy estimates, that more than $9.25 billion changed hands in secondary deals in 2003, up from $3.4 billion in 2002. Columbia cautions, though, that publicly acknowledged deals are in the minority, and that the actual number of deals may be much greater, considering that the majority of secondary deals are not disclosed.

Meanwhile, Alfeld, who was a onetime United Technologies executive, is set to retire soon, as planned. He began ratcheting down his activities in the firm five years ago.

His firm began making secondary investments in 1989. Landmark has about $4.2 billion under management and has raised 14 secondary funds.