PE fund briefs, week of Aug. 25, 2008

Madison Dearborn lowers fund target

Madison Dearborn Capital Partners, which has been trying to secure $10 billion for its sixth fund, has lowered the target of the new vehicle to $7.5 billion, according to a report last week in LBO Wire.

The Chicago-based firm has raised just over $4 billion for the fund, according to recent regulatory filings. People familiar with the firm have attributed the slow fund-raising to the wake of the credit crisis and economic slowdown, in which Madison Dearborn and other large buyout firms have slowed their distributions to limited partners.

Madison Dearborn raised $6.5 billion for its fifth fund two years ago. The largest investment from that fund is the firm’s contribution to the multi-billion-dollar take-private of Canadian telecommunications giant BCE Inc. Terms of that deal were finalized in July.

The firm typically spends three to four months raising its funds. Co-CEO Paul Finnegan previously said that he expects fund-raising to take “a lot longer” for fund VI, and he expects other firms raising large funds to face similar challenges.

“That’s the cycle we’re in,” Finnegan said during a keynote address at PE Networking Chicago, a conference presented by PE Week affiliate publication Buyouts. —Dan Primack and Bernard Vaughan

Evergreen Pacific quickly raises fund II

Evergreen Pacific Partners has made a swift journey of putting together its second fund. The firm recently raised $425 million for its sophomore vehicle, surpassing its $400 million target and reaching its hard cap a few months after the firm began raising the fund in April.

Limited partners include Credit Suisse, Guardian Life Insurance Company of America, Pennsylvania Public School Employees’ Retirement System (which committed up to $100 million), School Employees Retirement System of Ohio (up to $25 million) and Washington State Investment Board (up to $50 million).

The firm raised $275 million for its first fund, which closed in March 2005. Evergreen Pacific completed its sixth transaction in March and plans to make one more investment with fund I and then participate in some follow-ons, at which point the team will start investing from fund II, says Managing Partner T.J. McGill. He adds that the firm expects to make eight investments from fund II in the next three-and-a-half years.

The firm invests in mid-sized companies in the manufacturing, distribution, packing, media (radio and cable) and consumer products industries in the Northwestern United States and Western Canada. The firm looks for traditional buyouts, management-led buyouts and growth equity investments.

Evergreen Pacific’s three managing partners—McGill, Timothy Bernardez and Michael Nibarger—founded the firm in January 2003 after they worked together at Northwest Capital Appreciation, a Seattle-based private equity firm. —Nancy Gordon

River Associates plots fund VI

Executives at River Associates Investments, a lower mid-market shop, are plotting their sixth buyout fund and expect to start raising money from investors in 2009, says a source familiar with the firm.

Planning is still in the early stages, but the source says the firm is likely to target the fund between $125 million and $150 million.

The Chattanooga, Tenn.-based firm has not yet hired a placement agent. The firm is currently investing from its fifth fund, a $110 million vehicle that it raised in 2006. That fund is about 40% to 45% invested, says the source.

The firm invests in North American-based companies in manufacturing, distribution, industrial services and retail businesses, among other industries. —Bernard Vaughan

West Hill about halfway done with debut fund

Boston-based West Hill Partners, a firm created in 2007 by ex-J.W. Childs Associates executives to make control investments in middle-market growth companies, is expected to soon hold a first close in the range of $250 million to $300 million on West Hill Partners I.

The firm began marketing the fund in October 2007 with a $500 million target.

West Hill Partners has six investment professionals, five of whom worked together for several years at J. W. Childs, a Boston-based middle-market buyout firm. The departures from J.W. Childs reportedly stemmed from the firm’s unsuccessful attempt to raise a $2.5 billion fourth fund. —Nancy Gordon

Swiss Bank holds first close on European FoF

LODH Private Equity AG, a subsidiary of Lombard Odier Darier Hentsch, a Swiss private bank, is raising Euro Choice IV, a private equity fund of funds dedicated to the lower and middle mid-market. The fund, targeted at $925 million, is earmarked for country- and region-specific buyout, growth equity and turnaround funds in Western and Eastern Europe.

The firm held a first close last month of $460 million, and a final close is expected by the end of the year, says Thomas Frei, managing director.

Euro Choice III closed in 2006 with more than $250 million in commitments. —Nancy Gordon

Purepay Capital gears up for fund II

Purepay Capital, a Columbus, Ohio-based buyout firm that invests exclusively in financial technology and payments processing companies, has set its sights on raising a second fund of between $200 million and $250 million.

The firm, founded in 2006 by John Cullen and Steve Valachovic, raised $100 million for its debut effort. —David Toll