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Spin-out Group Holds First Close On $200M

Firm: GCP Capital Partners

Fund: GCP Capital Partners III LP

Target: $700 million

Placement Agent: Greenhill & Co. fund placement advisory group

GCP Capital Partners recently held a first close of $200 million on its third fund, a source with direct knowledge of the fundraising effort told Buyouts.

The former investment arm of advisory firm Greenhill & Co. is trying to raise $700 million for the fund, GCP Capital Partners III LP.

The source said limited partners in general continue to be cautious with allocations, with some choosing to wait and see what the first few investments look like, as well as what other institutions are backing the fund.

GCP Capital is also closing in on a buyout of an insurance brokerage company, which should close in December, the source said.

The firm typically writes equity checks of $10 million to $75 million per transaction, targeting companies in the business services, financial services, education, energy, insurance and telecommunications sectors. Target companies usually have enterprise values of $50 million to $500 million.

The firm generated a good return on a recent exit, which could help it attract investors to the latest fund. On Sept. 30, New Mountain Capital purchased 50 percent of Stroz Friedberg, a New York-based technical consulting and services company, from its senior management and GCP Capital for $115 million. GCP Capital sold half of its stake in Stroz Friedberg for $55 million, earning a return of 3x on half of its $37 million original investment, while continuing to own a 22 percent ownership stake in the company.

The firm originally had planned to begin raising capital in January 2009, but like many buyout shops shelved the effort during the economic downturn.

The firm raised $875 million in 2005 for its second fund, which has achieved a net investment multiple of 2x and a net IRR of more than 30 percent, our source said.