Lightyear Capital In $150M First Close Toward $1.1B Target

Firm: Lightyear Capital LLC

Fund: Lightyear Fund III LP

Close/Target: $150 million/$1.1 billion

Placement Agent: UBS Securities LLC

Lightyear Capital LLC has held a $150 million first close on a new fund, Lightyear Fund III LP, according to a regulatory filing.

The New York private equity firm, which has a focus on financial services investing, has a $1.1 billion target for the new pool, the filing said. Financial services make up more than 70 percent of Lightyear’s portfolio valuation, according to the Thomson One database.

UBS Securities LLC is the placement agent.

Lightyear Capital closed its predecessor fund, Lightyear Fund II LP, at $850 million in 2007, and its inaugural fund, The Lightyear Fund, at $750 million in May 2002.

The firm was founded by Donald B. Marron, a former chairman and CEO of Paine Webber Group Inc., after that firm’s sale to UBS in November 2000.

The firm’s first fund had only four investors: UBS, Caisse de Dépot et Placement du Québec, General Electric and Yasuda Mutual Life Insurance Co., according to a Buyouts report in March 2007. The second fund attracted 40 investors.

Other known investors are the Canada Pension Plan Investment Board, NB Private Equity Partners Ltd, and the San Francisco City and County Retirement System, according to Thomson One.

Lightyear Capital announced an agreement in February with the Dutch insurer ING Group to acquire ING Clarion Partners, a real estate investment firm. The management of Clarion Partners also participated in that deal. Financial terms were not disclosed.

Last July, Lightyear Capital announced it had sold U.S. crop insurer The NAU Group to QBE Holdings Inc., a unit of QBE Insurance Group Ltd of Australia. QBE paid $565 million cash, and NAU Group paid a cash dividend of $30 million immediately prior to the closing.

In June, portfolio company Higher One Holdings Inc. raised $108 million in an IPO. Lightyear Capital sold 3.5 million shares in that offering, reducing its ownership stake to 23.3 percent from 31.7 percent, according to a regulatory filing. Higher One offers a debit card to college students that also functions as a student ID.

Lightyear Capital said it cannot comment on fundraising.