Perseus continues march to eighth fund

Not wanting to get bogged down raising a conventional fund, Perseus LLC has structured its eighth fund so that it can admit investors continuously into the vehicle throughout its investment cycle, instead of doing so in a single prolonged effort, according to a source familiar with the effort.

Perseus raised $600 million for its previous fund, Perseus Partners VII, which closed in 2007. A formal target for fund VIII has not been set, but the source says it will likely be within $100 million to $200 million of fund VII’s total capitalization.

Investors in the seventh fund include the New Mexico Educational Retirement Board, the North Carolina Retirement System, the Public Employee Retirement Administration Commission and the University of California, according to public documents. As of March 31, 2009, Perseus Partners VII had generated a return multiple of 1.05x and a net IRR of 5.7% for the University of California.

Expect commitments to the new vehicle to come mostly from returning LPs, with occasional pledges coming from new investors. Perseus is also considering a targeted effort to attract new LPs in Europe and Asia, says the source.

The goal is to be able to raise Perseus Partners VIII in a difficult environment while still being able to put the brunt of the firm’s efforts on new deals and its existing portfolio. This will not be a “death march-style fundraising push,” says the source.

The Washington, D.C.-based firm expects to hold a first close with a group of investors in the first quarter of 2010, and then hold successive closings every three to six months to admit more limited partners into the mix. The firm has already received several commitments, says the source, who declined to disclose a specific amount.

In September, sources with knowledge of the situation said that they anticipated the first close to be held before the end of 2009.

Perseus’ three main target areas include undervalued or distressed investments; biotechnology and medical device businesses; and technology investments related to energy, environmental and engineering concerns. —Ari Nathanson