Putting The V In Vestar –


Sponsor: Vestar Capital Partners

Fund: Vestar Capital Partners V

Fund size: $3.7 billion

Placement Agent: Monument Group

Law firm: Kirkland and Ellis

Vestar Capital has closed its largest fund to date, having raised it, for the most part, in a matter of months this past summer.

Vestar started raising the fund in April 2005 and had commitments of $3 billion by its first close in August. It then had smaller, technical closes between August and the end of the year. Fundraising was wrapped up in late December and the firm announced a final close of $3.7 billion last month.

Vestar managing director and fundraising co-leader David Hooper said the oversubscribed fund perhaps could have closed earlier if not for the frenetic fund raising in 2005, which caused several LPs to spend more time reviewing other opportunities, processing paperwork and getting approvals.

He added that from the LP side, “There is significantly more potential for new investors interested in private equity [now] than in 1999.” But this didn’t affect Vestar’s capital raising process, which included 90% return LPs and some new investors from Europe. Vestar’s 1999 fund raise was also a quick process, he added, and this time, he said, “I think part of the reason for the speed was that we had a similar story to tell.”

Although this fund is substantially larger than its last fund, which had $2.5 billion in capital commitments, Hooper said the only new news from Vestar’s point of view was its expansion into Europe.

Since its last fund, Vestar has opened offices in Paris and Milan, which were intended to help find acquisition opportunities for Vestar’s domestic portfolio to expand abroad. With some new European investors in the fund providing connections, Vestar is in an even better spot now to find such targets, said Hooper.

Hooper said Vestar could have exceeded the $3.7 billion mark, but, “what we thought about was, What is the right amount of capital to invest intelligently over the next four to five years?'” Given the company’s size-20 partners spread between New York, Denver, Paris, Milan and Boston-$3.7 billion was an appropriate fund size, he said.

Fund IV was fully invested last year, and Vestar announced its first purchase out of Fund V in December-it bought Nybron Flooring International, which has over c400 million in sales and is called the European leader in wood flooring products by Vestar.

This fund will stay within Vestar’s traditional investment parameters: consumer, industrial, media and communications, financial services and healthcare. Vestar looks for transactions worth between $100 million and $3 billion and can invest up to $750 million in any one target.

In both Funds IV and V, Vestar’s partners have been the largest investors, a fact that Hooper said is important to investors which want to see the interests of the private equity firm aligned with the LPs. Hooper declined to disclose the fund’s LPs, but one long time investor is International Business Machines’ pension plan.