Castle Harlan halts fundraising efforts

New York-based Castle Harlan will cut back its operations by ceasing fundraising efforts for its sixth investment vehicle, a source familiar with the matter told Private Equity International.

Founded in 1987, the private equity firm was in the process of forming CHI Private Equity as a new unit to raise the sixth fund. No new subscriptions to the CHI Private Equity Fund will be accepted and the commitments to the fund so far will be revoked, according to a statement from Castle Harlan.

The firm will continue to manage its Funds IV and V until they realize the investments. The source said it is unsure how long the management will last, but stated “it will take several years.” 

Fund V held a final close in 2010 on $800.48 million, short of its $1.2 billion target, and Fund IV closed in 2003 on $1.2 billion.

Howard Morgan, Tariq Osman and Heather Faust were running CHI Private Equity and will be leaving the firm, the source confirmed. Osman and Faust will serve as independent directors.

While these operational reductions take place, the firm will always have the ability to reverse course again and fundraise for a new vehicle; Castle Harlan is not going out of business, it is just ceasing fundraising for the time being, according to the source.

Back in 2006 the firm underwent a generational transition when the founding partners, John Castle and Leonard Harlan, promoted Justin Wender to president, according to reports. Four years after the succession planning began Wender left the firm, and today is managing partner at Stella Point Capital.