Court Square hits $3bn on Fund III

The Citi spin-out has reached its target of $3bn though the fund will remain open for some final commitments.

Court Square Capital Partners has reached its $3 billion target on its third fund and is done fundraising, though the fund is not officially closed, according to two people with knowledge of the fundraising.

Court Square declined to comment about fundraising.

The firm has been marketing Fund III for about a year, and held a first close in September on $2.5 billion. Fund III will remain open to allow some last minute commitments, which will likely raise the fund total to about $3.1 billion, the sources said.

Management fees on the fund are 1.5 percent of commitments during the five-year investment period, according to documents from the Arkansas Teacher Retirement System, an LP in the fund. Management fees will be offset by 100 percent of transaction fee income, according to the pension system documents.

Court Square, which spun out of Citi in 2006, collected commitments from some large institutions, including the state pension systems of Oregon and Connecticut. The firm, led by a group of managing partners including David Thomas, Michael Delaney and Joseph Silvestri, raised $3.13 billion for its prior fund in 2006.

Fund II was generating a 1.37x multiple and a 10 percent internal rate of return as of 30 September, 2012, according to information from the Oregon Public Employees Retirement Fund.

Under Citi, Court Square was known as Citigroup Venture Capital Equity Partners, and was founded more than 30 years ago by William Comfort, who remains a managing partner at the firm. Court Square typically focuses on investments in the building products, business services, chemicals, consumer technology, telecommunications and transportation sectors. 

Last year, the firm sold graphics services company SGS International to Canadian firm Onex Corporation for $813 million. Court Square acquired SGS in 2005 for $410 million (as Citigroup Venture Capital Equity Partners).