PE fund briefs, week of Feb. 2, 2009

Yucaipa nears final close

Yucaipa Cos. has pulled in 38 investors and garnered more than $1.5 billion in commitments for Yucaipa American Alliance Fund II, an investment vehicle with a $2.5 billion hard cap, according to a regulatory filing. An investment abstract prepared by investment advisor Hamilton Lane, which is also a limited partner in the fund, places the fund’s target at $2 billion.

Calls to Yucaipa were not returned.

The fund-raising effort was helped early on by the California Public Employees’ Retirement System, which committed $400 million to the pool in the first quarter of 2008, re-upping after making a $200 million pledge to the fund’s vintage-2002 predecessor. Fund I had a net IRR of 13.9% and an investment multiple of 1.3x as of June 30, according to performance data from CalPERS.

Other investors in the fund include Los Angeles City Employees’ Retirement System, which pledged up to $20 million, and the Pennsylvania State Employees’ Retirement System, which committed up to $25 million. —Ari Nathanson

Onex cuts commitment to third buyout fund

Onex Corp. has opted to cut its own pledge in half for its latest buyout fund, which has raised $3 billion to date.

The Toronto-based investment company has lowered its contribution to Onex Partners III to $500 million, down from $1 billion, giving it now 12% of the pool’s total expected capital commitments of more than $4 billion.

Despite its decision to halve its commitment, Onex Corp. professed an optimistic outlook for 2009 in the statement disclosing the news. “Onex believes that the investing environment will be rich with opportunities in the near future and will be particularly attractive for value investors like it,” the statement said. Onex Corp. also disclosed carried interest on the fund is 8%, and that it began drawing management fees from the pool late in 2008.

The firm raised $3.4 billion for Onex Partners II, which closed in September 2006 short of its $4.5 billion goal.

LPs for Fund III include the Alaska Permanent Fund Corp., the California Public Employees’ Retirement System, the California State Teachers’ Retirement System, the Iowa Public Employees Retirement System and the State of New Jersey Division of Investment.

Onex Corp. is one of the few buyout firms that are publicly-listed. Its shares trade on the Toronto Stock Exchange. Onex Partners, the company’s main private equity investment platform, concentrates on large-scale acquisitions of North American businesses.

In September, Onex Corp. made its first deal from the fund, agreeing to acquire a 50% stake in RSI Home Products Inc., an Anaheim, Calif.-based cabinet maker, for $318 million. —Michael Baron

Spectrum targets fund VI at $1.25B

Spectrum Equity Investors has come to market with its sixth fund, according to a regulatory filing.

The vehicle has a target of $1.25 billion, and according to Principal Benjamin Spero, the firm held a first close on the fund in the fourth quarter. Spero’s comments were made on a panel at a January investor conference hosted by investment bank Gridley & Co. He declined to comment on the size of the close for Spectrum Equity Investors VI.

The target of the fund marks only a slight jump from the size of it prior fund, a $1.2 billion pool that closed in 2005.

Fund VI is earmarked for multi-stage venture and buyout investments in mid-market companies in the software, media, entertainment, financial technology, business services and information services industries, according to a regulatory filing.

Spectrum Equity, with offices in Boston and Menlo Park, Calif., landed one of the few PE-backed IPOs of 2008, with the $174 million market debut of RiskMetrics Group in January 2008. RiskMetrics is a risk analytics and information processing business serving the financial services industry. Prior to the IPO, Spectrum Equity made two add-on acquisitions to RiskMetrics Group in 2007. —Erin Griffith