RCP Closes Fund VII, Gears Up Fund VIII

RCP Advisors, which runs several funds of funds focusing on the lower-middle market, wrapped up fundraising on its latest pool, RCP Fund VII, LP, with $300 million in committed capital. A person knowledgeable about the firm said that fundraising for Fund VII took around a year, and since two-thirds of Fund VII’s capital has already been deployed, RCP would gear up to launch Fund VIII before year end.

The Chicago-based firm, which was founded in 2001, currently manages more than $2 billion in capital. The firm invests exclusively in North America, in primary funds, co-investments and secondary transactions. Most of the firm’s primary fund investments are with funds ranging in size between $100 million and $1 billion.

One of the most active investors in RCP has been the Florida State Board of Administration, which has committed a total of $200 million, $50 million to each of the firm’s latest four funds. RCP Fund IV, which launched at the end of 2006, has so far produced a 6 percent IRR, according to the SBA’s latest performance chart, from June 30. Return multiples were not available. RCP Fund V, which closed in 2007, has so far produced a 2 percent IRR. And RCP Fund VI, which closed in 2008, has produced an IRR of negative 11.2 percent. A spokesman for the Florida SBA declined to speak about the pension’s individual holdings.

Besides the Florida SBA, the firm is backed by a range of pensions, endowments and family offices. Most of the money for Fund VII, said the source, consisted of re-ups from existing investors.

“We are gratified by the confidence our partners have shown in us, particularly during such a tough fundraising market.” Charles Huebner, the firm’s managing principal, said in a statement. “if anything, the financial crisis has highlighted the relative benefits” of investing in smaller buyout funds.