PE fund briefs, week of May 12, 2008

Silver Lake starts shopping with small-cap fund

Silver Lake Sumeru didn’t wait to close its first pool of capital before starting to spend it. The small-market team of tech-focused LBO shop Silver Lake completed three deals before closing Silver Lake Sumeru I last week. For the debut effort, the firm raised $1.1 billion in commitments, $350 million above the target set last year.

The new fund is for the most part backed by limited partners that committed to Silver Lake’s large-market buyout funds. Aside from deal size, the two funds’ investment strategies are nearly identical. Whereas Silver Lake Sumeru invests $15 million to $150 million in deals of up to $500 million, Silver Lake invests $250 million to $300 million in deals valued between $800 million and $1 billion. Silver Lake’s investment size lends itself more to take-privates whereas Silver Lake Sumeru is suited to carve-outs and restructurings.

The funds have the capacity to co-invest alongside one another. That hasn’t happened yet, but the two teams have looked at several opportunities.

The new team hasn’t waited to get going. Silver Lake Sumeru announced two transactions in April and one in October. The latest and largest is a carve-out of ChoicePoint Inc.’s non-core government services business. In late April, Silver Lake Sumeru paid $185 million for i2, an Alpharetta, Ga.-based maker of software for public-sector law enforcement agents and investigators. —Erin Griffith

Turnaround shop nears close of inaugural fund

BlackEagle Partners, the turnaround firm founded by former Questor Management principals, expects to have a third and final close on its first fund in June, says a source familiar with the fund-raising effort told. The fund is targeted at $250 million.

BlackEagle officials declined to comment.

The Bloomfield Hills, Mich.-based shop held an initial close of about $130 million in June and a second close of $200 million in the first week of March.

In April 2005, three former Questor Management pros—Michael Madden, Garrett Kanehann and Jason Runco—founded the firm, previously known as Centurion Capital Partners. They were joined by Henry Watson, who founded the Caledonia Group, an advisory shop for the automotive and niche manufacturing industries.

The team began fund-raising in the second half of 2006. It originally planned on raising $300 million to $400 million, as previously reported in Buyouts, a PE Week affiliated publication.

So far the firm has completed two deals. In November 2006, it acquired Federal Broach & Machine Co., a Harrison, Mich.-based auto parts supplier. In November, it acquired Rockford Products, a Rockford, Ill.-based manufacturer of chassis and suspension components.

The firm seeks to invest between $5 million and $40 million in companies with enterprise values between $50 million and $200 million and minimum revenues of $50 million. It looks to make control investments in under-performing or troubled businesses, such as non-core subsidiaries of large companies, companies having trouble paying off debt, and bankrupt companies. —Bernard Vaughan

TowerBrook strives toward $2.75B

TowerBrook Capital Partners has raised more than one-third of its goal for its third buyout fund, according to a regulatory filing. With the help of placement agent UBS Securities, the London and New York-based firm, which is seeking $2.75 billion for TowerBrook Investors III, has raised $760 million thus far.

Contributing to that $760 million are recent commitments from the Massachusetts Pension Reserves Investment Management Board and Conversus Capital. MassPRIM pledged $50 million; Conversus Capital, a publicly traded fund of funds, agreed to an undisclosed sum of less than $70 million.

TowerBrook Investors III is the firm’s second independent fund-raising effort. After raising and deploying one fund under the umbrella of Soros Private Equity Partners, the firm became an independent entity in 2005. Its first stand-alone fund was TowerBrook Investors II, a $1.3 billion pool closed in March 2006. Soros Private Equity committed at least $250 million into that fund. Its commitment to TowerBrook Capital Partners’s third effort is unclear.

Additional backers of prior TowerBrook Capital Partners funds include California Public Employees’ Retirement System, AIG and MetLife.

Notably, the firm met success with its early stage investment in passenger airline Jet Blue Airways, and the turnaround of Swiss cable service provider Cablecom. This year, it has purchased luxury shoe designer Jimmy Choo and spirits and wine retailer Beverages & More. Both investments were from its second fund. —Erin Griffith

Flexpoint aims for $1.2B

Chicago-based Flexpoint Partners is targeting upwards of $1.2 billion for its second fund, according to LBO Wire. This includes a $450 million “overage” fund that would primarily be dedicated to financial deals, whereas part of its general fund would go towards the healthcare sector.

Flexpoint raised $225 million for its debut fund in 2005.

HarbourVest targets $2B

HarbourVest Partners is targeting $2 billion for a dedicated secondaries fund, according to regulatory filings. Called Dover Street VII, the vehicle has raised more than $940 million in commitments as of February.

HarbourVest traditionally makes secondary deals out of both its Dover Street and general fund of funds vehicles, but LBO Wire reports that it plans to shift toward only doing secondaries out of Dover Street.

Paul Capital raises nearly $1.7B

Paul Capital has closed its ninth secondaries fund with $1.65 billion in capital commitments. The firm, which also manages general funds of funds, raised about $200 million for its eighth secondaries fund in 2004 and $800 million for fund VII in 2001.

PAI raises $8.3B

French buyout firm PAI Partners closed its PAI Europe V fund with more than $8.3 billion in commitments. The firm says that nearly two-thirds of fund V was raised from European LPs. North American LPs invested more than $2 billion, and LPs in Asia and the Middle East combined to invested a little less than $1 billion.

The firm targets European businesses in such sectors as services, capital goods and consumer goods.

PAI raised $3.5 billion for fund IV in 2005. Among its acquisitions are Kwik-Fit, United Biscuits, Monier and Yoplait.