PE fund briefs, week of Nov. 16, 2009

Falcon adds $700M to nest

Falcon Investment Advisors closed its third mezzanine fund, Falcon Strategic Partners III, with $729 million of capital, short of the vehicle’s $800 million target.

Investors in fund III include the Los Angeles City Employees’ Retirement System (which pledged $10 million); Maryland State Retirement and Pension System ($35 million); New Mexico State Investment Council ($25 million); New York State Common Retirement Fund ($50 million); and Teachers’ Retirement System of Louisiana ($75 million).

Other limited partners in the fund include Alpinvest and the Florida State Board of Administration. Falcon Investment is contributing 2% of aggregate fund commitments.

The firm’s first fund, a $223 million 2002 vintage fund, had generated a 41.6% gross IRR and a 2.5x investment multiple, as of June 30, 2008, according to the New Mexico State Investment Council. Fund II, a $440 million 2005 vintage fund, had generated a 13.9% gross IRR and a 1.2x investment multiple.

Look for the firm to invest $10 million to $75 million of subordinated debt and equity in mid-sized companies to support their acquisitions, recapitalizations, buyouts and organic growth initiatives.

The firm, which was founded in 2000, and which has offices in Boston, Dallas and New York, is led by Managing Partners Sandeep Alva and William Kennedy, who previously worked at the mezzanine group at John Hancock Life Insurance. —Nancy Gordon

Lone Star lowers fees on some funds

Lone Star Funds is cutting some of its fees as it tries to raise $20 billion to buy pools of troubled mortgages and other kinds of distressed debt, according to a Wall Street Journal report last week.

Lone Star, led by John Grayken, reduced the minimum management fee it will charge in the two new funds to 0.35% from 0.75% in its previous fund, in a move to win new commitments from big investors, such as the Oregon Investment Council, the paper said.

Oregon’s board, which oversees $51 billion public-employee pension fund’s investments, recently agreed to put $400 million into two new Lone Star funds after the firm agreed to reduce its fees, the Wall Street Journal reported.

Lone Star could not be immediately reached for comment. —Reuters

Lime Rock raises $410M

Lime Rock, an energy-focused private equity firm, has closed its second Lime Rock Resources fund with $410 million in capital commitments. It will seek to acquire, directly operate and improve lower-risk oil and gas properties in the United States.

Its first Lime Rock Resources fund raised $450 million and closed in 2005.

WestView wraps up second fund

WestView Capital Partners, a Boston-based private equity firm focused on growth equity opportunities in the middle markets, has closed its second fund with $325 million in capital commitments. The firm raised $195 million for its debut fund, which closed in 2004.

Probitas Partners

served as placement agent.

Tennenbaum Capital closes $330M

Tennenbaum Capital Partners has secured more than $330 million in capital commitments for its first fund focused on debtor-in-possession (DIP) financing.