The firm says that the newly raised capital will not support existing portfolio companies. Instead, it’s a top-off to fund III, because KPS says that it anticipates more opportunities than the original fund size could have supported.
The New York-based turnaround firm informed LPs of its plans to raise another $800 million. It held a $700 million first close in mid-August, with the final close occurring this month.
KPS has made three investments out of the fund, with equity checks totaling about $150 million. Investments include Waterford Wedgewood, Global Brass and Copper Inc. (f.k.a. Olin Metals) and North American Breweries (f.k.a. Labatt USA). The firm now expects to be able to make between 12 and 15 platform investments.
Not only was KPS able to quickly secure $800 million in the current economic climate, but it did so without adjusting the fund’s premium terms. KPS III has a 25% carried interest structure and a 50/50 fee split.
The most recent data for KPS III comes from investor California Public Employees’ Retirement System, which reports the fund as having an 8.8% IRR. However, it’s too soon to judge the fund, given how little of the fund has been called down.
The Southlake, Texas-based firm is again actively marketing a $250 million vehicle, Southlake Equity Group Fund I, with Neuberger Berman serving as the placement agent.
The firm has held almost 100 meetings so far with potential backers, according to a source with knowledge of the situation. A second round of meetings began this month. Southlake Equity is approaching about $100 million in commitments for a first close in the fall, and, if all goes well, the source says, a final closing could occur in the first quarter of 2010.
Southlake Equity was formed in 2007 by co-founding partners Todd Robichaux and Doug Wheat to buy lower-middle-market companies with enterprise values ranging from $20 million to $150 million in the South-Central region of the United States.
The firm had tried to raise a fund ranging between $300 million and $400 million. But several potential investors indicated they would like to see the principals do a deal together. In June 2008, Southlake Equity completed its first acquisition with the purchase of PJ Trailers, a manufacturer and distributor of heavy-duty, open-utility trailers, for an undisclosed amount.
Charlesbank Capital closes seventh fund