Caltius closes second buyout fund on $133m(3)

Caltius Capital Management has held a final close on its second private equity vehicle, which has commitments from limited partners including several CalPERS- and CalSTRS- backed investment vehicles.

Caltius Capital Management has raised $129.5 million (€91 million) for its second private equity fund, Caltius Equity Partners II, and $3.5 million for a co-investment side vehicle.

The two funds closed shy of their combined target of $150 million target but the capital raised is more than double the amount committed to the firm’s first buyout fund, which closed on $53 million in 1999.

Although nearly all of the debut fund’s backers returned for the second fund, new investors comprise 75 percent of its partner group. The new LPs include INVESCO Private Capital, the California State Teachers Retirement System’s New and Next Generation Manager Fund, and several vehicles backed by the California Public Employees’ Retirement System.

The co-investment vehicle has around 20 LPs, all of whom are executives at Caltius’ portfolio companies or have helped Caltius source deals.

Caltius Equity Partners II held a first close on $70 million in April 2006. The fund has made four investments to date: the acquisitions of Starpoint Health and Meyer Control Corporation, and the recapitalizations of Electra Bicycle Company and The Institute of Audio Research.

The fund will continue the strategy of its predecessor, although its greatly increased cache of dry powder will allow Caltius to invest more of its own capital rather than relying on co-investors, said president and chief executive Jim Upchurch.

Caltius is based in Los Angeles, and typically invests between $5 million and $20 million per deal in service-oriented, non-capital intensive industries including healthcare, consumer products and business services.

The firm is also active in the mezzanine debt sector. Caltius closed its most recent mezzanine fund on $300 million in September of 2004.