Cornell Capital raises $850m for third fund

New York-based Cornell Capital, founded by a former vice chair of Goldman Sachs merchant bank, has a target of $2bn for its latest fund.

New York-based Cornell Capital has so far raised $850 million of its $2 billion target for its third flagship fund, Cornell Capital Partners III, according to a Securities and Exchange Commission filing.

The document, dated 13 September, states that the latest fund raised the $850 million from nine investors. This amount includes $10 million from a general partner commitment, it said.

According to PEI data, Cornell Capital’s previous fund was Cornell Capital Special Situations Partners II, which closed in June on $362 million. An SEC filing from 2 June indicates that there are eight investors in the fund, which accepted a minimum $2 million commitment per limited partner. The fund’s first commitment came in May 2015, it said.

Its predecessor, Cornell Capital Special Situations Partners I, held a final close on $921 million in April 2014. An SEC filing from April 2014 said that there are 21 investors in the fund.

Cornell Capital was founded by former Goldman Sachs vice chairman Henry Cornell, who was a managing director of Goldman Sachs’ merchant banking division. In 2013, he retired as vice chairman of the merchant bank, according to reports.

There has been a spike in the number of new funds coming into market, as private equity executives leave their firms to start their own. For example, The Carlyle Group’s Mitch Petrick stepped down from a managing director position at the firm to launch his own investment management firm, as reported by Private Equity International. Another firm, ParkerGale, launched in 2014 as a spinout from Chicago Growth Partners.

There could be several reasons for one’s decision to leave and begin his or her own fund. It may be due to the winding-down in fundraising at the existing firm, as in the case of ParkerGale. Or, partners could be searching for a bigger share in carried interest, which typically goes mostly to the founding partners. This bias in carry can lead to senior-level departures at a private equity firm, whose future fundraising may be impacted by them, as reported by PEI.

At this time it is unclear what stage in the fundraising process Cornell Capital's third fund has reached. PEI placed a call and was unable to reach a spokesperson.