Piper Jaffray Moving Swiftly To Fourth Fund

Firm: Piper Jaffray Private Capital

Fund: Piper Jaffray Private Equity Partners IV

Target: Undetermined

Status: Premarketing

Focus: Clean technology, buyouts, venture and distressed managers

Placement Agent: None

Law Firm: Ropes & Gray

Piper Jaffray Private Capital is merging its clean technology fund of funds with its main fund of funds for its next fundraise, which is coming to market shortly.

The firm remains in “herding-cats mode” for its previous main fund, according to a source close to the firm, rounding up limited partners for a Sept. 30 close on the $250 million Piper Jaffray Private Equity Partners III. The vehicle is fully committed to buyout, venture and distressed funds managers. “This fund is baked,” the source told Buyouts.

But already Piper Jaffray Private Capital, an arm of Minneapolis investment bank Piper Jaffray, is moving ahead with a successor fund of funds, according to our source. With that vehicle, investors can choose whether to back buyout funds, clean technology investments, direct investments or venture capital firms, our source said.

Adding clean tech to the main fund of funds is a new twist for Piper Jaffray Private Capital. Earlier this year, the firm closed on a $60 million clean technology-only fund of funds, Piper Jaffray Cleantech Ventures LP, which is already fully committed. Piper Jaffray Private Capital decided to blend its next clean technology fund into a diversified private equity fund of funds because limited partners wanted more diversity, according to our source.

Piper Jaffray Private Equity Partners IV does not yet have a target size. The fund will draw on the in-house expertise of its mid-market investment bank parent, which has built both technology and alternative-energy advisory groups.

As for its clean-tech bucket, the fourth fund of funds plans to back 10 clean-tech managers, and five of them have already been identified, including the $250 million-targeted Technology Partners VIII. Piper Jaffray Private Capital hasn’t yet determined just how many buyout, venture and distressed managers to back with the fund, according to our source.

There aren’t many funds of funds with such a strong focus on clean technology. The only other clean-tech fund of funds now in the market belongs to Pacific Corporate Group, the La Jolla, Calif., advisor. The California Public Employees’ Retirement System committed $400 million earlier this year to PCG Cleantech Private Equity Markets Fund, and PCG is expected to raise more capital from other institutional investors for clean-tech-focused managers and co-investments.

Piper Jaffray Private Capital’s fully committed third fund has committed $100 million to 10 buyout funds. It will back 22 firms in all, with the balance committed to venture capital funds. The third fund has been deployed to back the $850 million Lightyear Fund II, the $6.5 billion Madison Dearborn Partners V, and the $5.75 billion real estate and distressed fund CVI Global Value Fund, raised by CarVal Investors, a division of conglomerate Cargill Inc.

The third fund has about 40 limited partners, according to our source.—M.C.