PE fund briefs, week of Sept. 24, 2007

PNC Equity branches out

PNC Equity Partners

, a Pittsburgh-based lower mid-market investor, has closed on $272 million for PNC Equity Partners II, a $75 million increase in size from its 2001 predecessor. But unlike with fund I, in which PNC Financial Services Group provided the majority of the equity, PNC Equity Partners took in about $75 million from its parent this time. The firm raised the rest from 13 institutional and seven individual investors.

The Pennsylvania Public Schools Employees’ Retirement System re-upped for PNC Equity’s second fund, kicking in a bigger contribution, says David Hillman, founding partner of PNC Equity. The firm also snagged a new limited partner in the Pennsylvania State Employees’ Retirement System.

The LBO shop has already started putting the money to work. Earlier this month, it completed the acquisition of Bachrach Inc., a New Kensington, Pa.-based maker of gas-detection equipment. PNC Equity did not disclose deal terms.

Earlier this year, the firm invested $16 million in Lone Star Overnight, a regional shipping company that serves Texas and surrounding states. PNC Equity bought the company from Brazos Private Equity. PNC Equity typically seeks companies generating between $25 million and $125 million in revenue. The firm targets three industry sectors: niche manufacturing, value-added distribution and business outsourcing.

Possible split in the works for Thoma Cressey Bravo

Thoma Cressey Bravo is talking to LPs about splitting into two independent operations, according to Private Equity Insider.

The discussions are still in their early phase, but would result in name partners Orlando Bravo and Carl Thoma running one firm, with health care specialist Bryan Cressey running another.

The Chicago-based firm, f.k.a. as Thoma Cressey Equity Partners, added the Bravo name earlier this year. PEI reported that Bravo had pushed the firm since 2002 to undertake more buyouts of software companies, which now represent about 60% of the firm’s business.

Thoma Cressey last year raised $765 million for Thoma Cressey Fund VIII. Sources say the firm was considering seeking about $1.2 billion for a ninth buyout fund next year.

Treadstone seeks $300M for distressed debt fund

Treadstone Partners

, a Dallas-based distressed debt and turnaround investor, is preparing to begin fund-raising for $300 million for its first fund with broad institutional backing. C.P. Eaton Partners has signed on as placement agent.

Co-founders Phillip Dixon and Gary Thomason launched Treadstone in 1993, and have invested about $350 million in more than 200 transactions. Treadstone Partners claims to have lost money on only six of its more than 200 deals.

The firm buys debt or equity securities in troubled or bankrupt industrial companies, then looks to cash out in a subsequent restructuring or bankruptcy emergence. Occasionally the firm has taken control of companies—a strategy it plans to pursue more often in the months ahead. In such transactions, the firm typically brings in restructuring advisors.

Much of Treadstone’s investment capital has come from third parties; at various times the firm has invested money on behalf of The Baupost Group, a Boston-based money manager; Varde Investment Partners, a Minneapolis-based hedge fund manager; and Goldman Sachs & Co., the New York investment bank.

In early 2004 the firm lost a transaction at the last minute when a backer pulled out, and it was that event that inspired the firm to begin a search for a more permanent source of financing. Last year the firm first talked to C.P. Eaton about raising a limited partnership with a diverse group of backers.

In June, Drum Capital Management, a South Norwalk, Conn.-based manager of specialized funds of funds, committed $60 million to the Treadstone fund, which is expected to help pave the way for a more broad-based fund-raising effort.

Angelo Gordon targets $900M

Driven by the credit crunch, Angelo Gordon & Co. plans to raise $900 million for its fourth turnaround fund. The main vehicle will be targeted at $700 million, with a $200 million reserve fund raised for deals in excess of $75 million.

The New York-based firm declined to comment. But David Roberts, a senior managing director of Angelo Gordon, said in a prepared statement that the firm should find ample deal flow for the new fund as “the credit cycle unwinds,” opening “substantial opportunities for us to purchase smaller and distressed businesses at deep value prices.”

Previous limited partners in Angelo Gordon funds include the New York State Common Retirement Fund and the University of Texas Investment Management Co. Through May 2007 Angelo Gordon’s most recent buyout fund, a $250 million vehicle raised in 2005, generated an IRR of 3.8%, according to UTIMCO.

In other Angelo Gordon news, the firm has hired Jeff Fienberg as a managing director and Harish Nataraj as a senior associate. Feinberg previously was a managing director with Alvarez & Marsal, while Nataraj was with Kohlberg & Co.

SPG nets $620M

SPG Partners

has closed its debut fund with $620 million in capital commitments. The New York-based firm focuses on middle-market investments and was co-founded by Ian Snow and Ogden Phipps and includes seven operating partners, including Jim Amos (former CEO of Mail Boxes Etc.) and Halsey Minor (former CEO of CNET Networks).

Nogales secures $245M

Nogales Investors Management

has closed its second fund with $245 million in capital commitments. Limited partners include California State Teachers’ Retirement System. The Los Angeles-based firm will continue to invest between $10 million and $30 million in middle-market companies.

It was founded by former Univision President Luis Nogales, and also includes Partners Mark Mickelson and Steve Sebastian (who joined in July from Westar Capital).

Lehman, NJ form fund

Lehman Brothers

and the State of New Jersey have formed a $105 million private equity fund, focused on investments that will help “drive economic growth” in New Jersey. It is called the New Jersey Direct Investment Fund, with Lehman serving as GP and the state serving as the primary LP.

Saw Mills raises $270M

Saw Mill Capital

has closed its first traditional fund with $270 million in capital commitments. The Briarcliff Manor, N.Y.-based firm previously operated as a “fundless sponsor,” and acquires manufacturing and service companies with enterprise values of between $25 million and $150 million.