PE fund briefs, week of April 7, 2008

Morgan Creek targets third fund at $275M

Morgan Creek Capital Management expected to hold a first close on its third vehicle by the end of March as it continues its strategy of raising and deploying a fund of funds each year. The fund sports a $275 million target.

The Chapel Hill, N.C.-based investment adviser and fund of funds manager has raked in between $125 million and $150 million for Morgan Creek Partners III. Fund II was earmarked for a mix of buyout funds (30%), real estate, energy and venture capital funds, according to a source familiar with the effort.

On the buyout side of the ledger, Morgan Creek favors shops that focus on the small end of the middle market, such as Monomoy Capital Partners, which received a commitment. Monomoy Capital specializes in turnarounds of businesses with annual revenues of between $20 million and $200 million and typically deploys equity in slugs ranging from $5 million to $30 million.

Expect half of the new fund’s capital to be deployed to invest in assets outside the United States. The firm recently expanded into Asia and has two principals, Managing Directors Nirav Kachalia and Jason Zhang, on the ground in China. —Joshua PayneKKR closes $17.6B fund

Kohlberg Kravis Roberts & Co. has closed its latest mega-buyout fund having raised $17.6 billion. That’s a bit short of its $18 billion hard target, but nearly triple the $6 billion that it raised for its previous effort in 2003. Much of it has already been invested.

PrivateEquityOnline first reported the news kast week, and we’ve since confirmed it with a KKR spokesman. KKR also is in the process of raising €8 billion for its third dedicated European fund. Most of the new fund — called KKR 2006 Fund Private Investors – is earmarked for North American investments, but some will be opportunistically disbursed elsewhere.

Blackstone postpones buyout fund

The Blackstone Group has postponed a first close on its new buyout fund, which was scheduled to close April 11.

Blame here goes to the tortoise-slow deal environment, as Blackstone’s current fund has more dry powder than the firm had expected to have by the end of the first quarter this year. Blackstone did put more money to work in the fourth quarter last year than in any other quarter in the firm’s history (thanks largely to its $20-billion purchase of Hilton Hotels), but it’s been slow going ever since.

It’s also worth noting that this fund-raising drive is expected to mirror past Blackstone efforts, which means no definitive target or final close date. Yes, the fund has a $20 billion cover price, but the firm’s current fund closed on $22 billion in mid-2007, after coming to market in 2004 with a $10 billion target.

MBK targets $3B for fund II

Seoul, South Korea-based MBK Partners is targeting $3 billion for its second fund, according to LBO Wire. The buyout firm was formed in 2005 by Michael Kim, who previously was co-head of Asian buyouts for The Carlyle Group. MBK closed its debut fund in 2006 with $1.56 billion from such LPs as Temasek Holdings, the Ontario Teachers’ Pension Plan, Morgan Stanley, Bank of Tokyo and the National Agricultural Cooperatives Federation of South Korea.

Cadent Energy powers up with $473M second fund

Cadent Energy Partners, a Rye Brook, N.Y.-based private equity firm focused on energy opportunities, has closed its second fund with more than $473 million in commitments. Limited partners include CommonFund, University of Chicago and the Andrew W. Mellon Foundation.

Fund II was targeted at $375 million. The firm raised $220 million for its inaugural fund in 2002.

Founded in 2003, Cadent makes control and influential minority investments in small to medium sized energy and related companies primarily based in North America.