Momentum Building Behind Platinum’s Fund III

Platinum Equity LLC has some serious momentum in its third fundraising effort and expects close the fund sometime in the third quarter, a source close to the fundraising told Buyouts.

The firm recently held a first close of more than $1 billion, according to the source, confirming an earlier report by Fortune.com.

The Los Angeles-based turnaround firm is trying to raise 3.75 billion, and as much as $4 billion. Platinum Equity professionals are contributing $200 million to the fund (the Term Sheet post had stated $100 million). Park Hill Group, a firm owned by The Blackstone Group that helps buyout firms raise money, is orchestrating the campaign.

Founded in 1995, Platinum Equity sponsors buyouts of often struggling companies in a variety of sectors, from industrials to media to information technology and manufacturing, among others. “Look, these guys tend to be much more contrarian than their competitors,” said Erik Hirsch, CIO of Hamilton Lane Advisors, for a 2009 profile of the firm.

The firm’s high-risk strategy often pays off. Its first fund, a vintage 2004 vehicle, was posting an internal rate of return of roughly 60 percent as of June 30, 2011, according to the Florida State Board of Administration.

The firm has been exceptionally active in the last year or so, announcing at least 14 new investments since Jan. 1, 2011, while exiting at least nine investments during the same period, according to Capital IQ.