The team at
Scott Vollmer, CEO, anticipates putting more money to work in the European market than in prior funds because deal flow has picked up there.
Those fund managers would become part of Drum Special Situation Partners III, a fund of funds in the market that is targeted at between $350 million and $500 million. So far, the firm has raised about $175 million from U.S.-based pension funds, foundations and endowments.
Drum Capital raised about $430 million for its second fund of funds, which closed in late 2007. LPs in the previous fund include the Nevada System of Higher Education; the Superannuation Funds Management Corp. of South Australia; and the University of California, Irvine Foundation.
Duran Curis, managing director of Drum Capital, said that the firm is tracking about 20 funds in the United Kingdom and continental Europe, including those based in Germany, Italy, France and the Netherlands. Up to 12 of those could be a good fit for Drum Capital, and up to six will likely receive a pledge ranging from $15 million to $30 million, said Curis, who joined the firm in June after previously working as a managing director at fund-of-funds manager HRJ Capital.
Drum Capital prefers to commit to European funds of less than $730 million. Some of the managers that fit the firm’s profile include Paris-based Butler Capital Partners, U.K.-based Cabot Square Capital, U.K.-based Endless and Munich-based Orlando Management GmbH.
For the new fund of funds, the firm intends to pledge to about 15 to 20 underlying partnerships over a four-year period. —Nancy Gordon
CalSTRS commits $350M
The California State Teachers’ Retirement System recently disclosed five private equity pledges totaling $350 million for a variety of strategies.
All of the pledges took place in the second quarter.
CalSTRS committed $100 million to Energy Capital Partners II, a buyout fund earmarked for investments in North American energy infrastructure opportunities. Energy Capital Partners is seeking up to $3.5 billion for the vehicle.
Hellman & Friedman Capital Partners VII also received a commitment of $100 million from the state pension fund. San Francisco-based Hellman & Friedman is targeting $7 billion for the new fund with a hard cap of $10 billion.
CalSTRS also reported making an $80 million commitment to TA Associates’ eleventh fund, which recently held a final close on $4 billion. The growth-equity vehicle is earmarked for investments in the technology, financial services, business services, health care and consumer sectors. The Boston firm’s previous debt fund, which closed in March 2006, raised $777.5 million.
In addition, a $50 million pledge from CalSTRS went to the Yucaipa Corporate Initiatives Fund II, which will target investments in the U.S. manufacturing, logistics, retail and consumer sectors. The fund is a joint venture between Yucaipa Cos. and the Johnson Development Co., which works to revitalize deteriorating urban areas by building movie complexes, restaurants and retail centers.
As of July 31, the $124 billion pension fund had an actual allocation to private equity of 11.8%, just shy of its 12% target allocation. —Nancy Gordon
LA Fire narrows PE adviser search
The remaining contenders are Cliffwater, Credit Suisse First Boston, Ennis Knupp, Hamilton Lane, Macquarie Funds Management, New England Pension Consulting, Portfolio Advisors, Stepstone Group and Wilshire Associates. Pension fund staff and its general consultant, Pension Consulting Alliance, are vetting the firms.
In June, the staff recommended that the board change from having two private equity advisers to having only one that will advise it on both the core and specialized parts of its private equity portfolio. The move follows that of New York State Comptroller Thomas DiNapoli, who filed suit in May against advisory firm Aldus Equity, its principals and others for wrongful conduct, including fraud, bribery, breach of contract and conspiracy for its alleged role in the state’s pay-to-play scandal.
LA Fire manages $12.5 billion, with a 10% target allocation to private equity and a 5% actual allocation to the asset class. —Nancy Gordon