Perseus Tries Creative Approach To Reach Target

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 rather than doing so in a single prolonged effort, according to a source familiar with the effort.

The goal is to be able to raise Perseus Partners VIII LP 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,” the source said.

The Washington, D.C.-based firm expects to hold a first closing 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, said our source, who declined to disclose a specific amount. In September, sources with knowledge of the situation told Buyouts they anticipated the first close to be held before the end of 2009.

Perseus closed its previous fund, Perseus Partners VII LP, in 2007 with roughly $600 million in commitments. A formal target for Fund VIII has not been set, but our source said it will likely be within $100 million to $200 million of Fund VII’s total capitalization.

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 based in Europe and Asia, our source said.

According to public documents, investors in Perseus Partners VII include the New Mexico Educational Retirement Board, the North Carolina Retirement System, the Massachusetts-based Public Employee Retirement Administration Commission, and the University of California.

As of March 31, 2009, Perseus Partners VII had generated a return multiple of 1.05x and a net IRR of 5.7 percent for the University of California. Perseus’s three main target areas include undervalued or distressed investments; biotechnology and medical device businesses; and technology investments related to energy, environmental and engineering concerns.