PE fund briefs, week of Dec. 8, 2008

Great Hill nears close of fourth fund

Executives at Great Hill Partners expect to close their fourth buyout fund in the first quarter at the fund’s hard cap of $1.25 billion, according to sources familiar with the fund-raising effort.

The Boston-based firm—which invests in growth capital and majority investments in the business services, consumer services, media, communications, and software industries—has already beaten its initial target of $1 billion for the fund, having raised $1.1 billion.

Officials at the firm didn’t respond to requests for comment.

A total of 60 institutional investors have already signed up for Great Hill Equity Partners IV, including the Pennsylvania State Employees’ Retirement System, which in June committed $25 million, and the Maryland State Retirement & Pension System, which committed $50 million. In addition, 36 out of 45 investors from the firm’s third fund re-upped.

Great Hill raised $750 million for its third fund, which closed in 2005.

The firm typically writes equity checks of $60 million to $75 million for companies with enterprise values of $100 million to $500 million. It is known for not using excessive debt to drive returns. The firm bought six of 11 companies from fund III with straight equity.

Great Hill Partners will also take minority stakes in companies, including PIPE investments. It typically holds companies three to seven years.

Great Hill Partners’ most recent deal came in late July, when it partnered with Spectrum Equity to buy Passport Health Communications Inc., a Franklin, Tenn.-based health care technology company. —Bernard VaughanOaktree Capital ups European fund

Distressed investment specialist Oaktree Capital Management has raised about $2.3 billion for a fund targeting hard-hit companies in Europe, up from the $1.6 billion it had previously sought, according to a report last week in the Los Angeles Times.

Los Angeles-based Oaktree, which buys the bonds of distressed companies cheaply and waits for their value to rise, had raised about $500 million for OCM European Principal Opportunities Fund I, which closed in 2006.

As long as the financial system and the economy don’t crumble, now is shaping up to be a great moment for distressed investing, Chairman Howard Marks told the paper.

“Opportunities are rife in number, and (distressed bonds) seem cheap on their face,” he said. “But ironically the only negative is that there might almost be too much distress. We need a financial system that remains viable.” —Reuters

Sentica secures $65M

Sentica Partners, a Finnish buyout firm focused on the lower middle-markets, has closed its third fund with about $65 million in capital commitments.

All of the commitments to the Sentica Buyout III fund came from existing investors. The largest commitment came from the Finnish Industry Investment Ltd. Ilmarinen Pension Insurance Co. and Etera Mutual Pension Insurance Co. also invested.