Lehman Spin-out Seeks First Fund Under New Banner

The New York-based firm is seeking $2 billion for the fund, Atlantic Capital Partners V LP. The firm invests $50 million to $180 million in companies with enterprise values of $100 million to $1 billion. Sectors of interest include business services, consumer, energy and financial services.

The fund would be a sizable decrease from the $3.3 billion the firm, then known as Lehman Brothers Merchant Banking, raised in 2007. But in today’s post-financial crisis fundraising market, $2 billion is still fairly ambitious.

Executives at Atlantic Capital along with Luxembourg-based investment firm Reined Investments SAC, bought the firm from the Lehman Brothers estate in April 2009. 

Atlantic Capital joins the Berger Berman Group as a former Lehman Brothers private equity group that appears poised for independent life for the foreseeable future since spinning out. Late last year the former fund of funds manager for Lehman Brothers raised $720 million in commitments for its first fund of funds since going independent in 2008.

Some exits would likely help Atlantic Capital’s fundraising efforts.

The firm’s most recent exit appears to have come in June, when SR AM LLC bought from Atlantic Capital a 40 percent stake in a maker of bicycle components acquired in 2008, according to Capital IQ. Before that, the most recent exits were in January of 2011, when the firm sold Spumed, a beverage company based in Italy, to Re fresco Group BB; and Phoenix Brands LLC, a provider of detergents and other laundry products sold to Lincolnshire Management Inc. It’s unclear what returns Atlantic Capital generated with these deals, however, or if the firm generated returns elsewhere such as through dividend recapitalisations.

When it comes to the age of its investments, Atlantic Capital’s portfolio features a mix of new and ageing deals. Ten of the 23 investments it lists as “current” on its Web site were made in 2010 or later. Eight were made in 2008 or earlier, making them potential targets for exit. It’s unclear when Atlantic Capital first invested in five of the companies it lists as “current.”

Executives at Atlantic Capital declined to comment.