PE fund briefs, week of Nov. 9, 2009

PAI offers to halve fund

French private equity firm PAI Partners has proposed to investors that it cut its $7.9 billion fifth buyout fund in half, and to change its governance in favor of investors, says a source close to the matter.

“PAI sent its offer,” the source told Reuters, adding that a response was expected on Dec. 3.

PAI is offering to take fees for setting up some transactions and to lower management fees. It is also offering to lower the threshold of investors votes required to open or close a fund to 60% from 80%, says one of the sources.

The firm raised its fifth fund in 2007, following its $3 billion fourth fund, which closed in 2005. It’s not known how much of the fifth fund has been invested.

Any change to fund V, which bought stakes in IT services company Atos Origin and building materials firm Xella International GmbH last year, echoes similar moves by peers TPG and Permira, which have faced pressure from investors keen to reduce their exposure to private equity.

“We need 66.67% of the votes to approve or reject the proposal. This is not a done deal but it’s feasible,” the source says.

In September, sources familiar with the situation said that the fund was ready to cut the fund by half following a recent management bust-up. The move follows the early retirement of Dominique Megret as CEO in August, which coincided with the departure of his right-hand man, Bertrand Meunier.

Megret’s exit triggered a so-called “key-man” clause, allowing investors to renegotiate their commitments to the PAI’s fifth European buyout fund. —Reuters

CVC infrastructure fund not yet raised

More than a year after private equity firm CVC Capital Partners launched its first infrastructure fund, it has yet to reach a close in its fund-raising, say two sources familiar with the process.

The Luxembourg-based buyout firm launched its debut $2 billion infrastructure fund in September 2008, but has not secured sufficient commitments to date for a close in what is a challenging fund-raising environment, sources say.

One of the sources says that the fund’s existing commitments were very far from its target while a second source says CVC was still working toward a close and was engaged in advanced discussions with “key investors.”

CVC did not respond to a request for comment.

CVC’s infrastructure fund is led by Stephen Vineburg, who previously led the infrastructure investment team at Colonial First State Global Asset Management, the investment arm of Commonwealth Bank of Australia. —Greg Roumeliotis, Reuters

Sankaty DIP Fund Beats Target

Sankaty Advisors, the credit affiliate of Bain Capital, has closed on $672 million from 740 investors for its DIP Opportunities Fund, according to recent regulatory filings.

The firm raised $388.4 million in commitments from 446 U.S. investors and more than $284 million in commitments from 294 offshore investors.

The firm’s target was previously believed to be about $400 million.

The fund has a two-year investment period with fees of 1.75% on commitments, and Sankaty anticipates returns of between 12% and 15% for the entity, according to an undisclosed investor in the fund.

Meanwhile, the firm also is looking to raise $750 million for Sankaty Middle Market Opportunities Fund. —Erin Griffith

Black Opal launches

Black Opal Equity

has launched as a Jersey City, N.J.-based private equity firm focused on U.S. middle-market businesses in the infrastructure, essential service and government sectors. Managing Partner Matthew Day previously focused on infrastructure and essential services investments with Macquarie.

Celtic scores with $100M

Celtic Therapeutics

, a private equity firm formed to acquire and invest in a diversified portfolio of 10 to 15 novel therapeutic product candidates, has received a $100 million investment commitment from PPD Inc. (Nasdaq: PPDI).

Tiger off and running

Tiger Infrastructure Partners has launched as a new infrastructure private equity firm, with a focus on mid-market opportunities in North America and in Europe. It is led by Emil Henry, former Assistant Secretary of the U.S. Treasury who most recently ran Lehman Brothers’ infrastructure private equity business.