Genstar amasses almost $4bn for Fund VIII

The final close for the North America-focused private equity firm’s eighth vehicle includes $650m for larger deals.

Genstar Capital, a mid-market private equity firm, has held a final close on its eighth fund on almost double the size of its predecessor after 10 weeks of fundraising.

The San Francisco-headquartered firm has raised $3.95 billion for Genstar Capital Partners VIII, according to a statement. Limited partners committed $3.1 billion to the fund and a further $650 million has been raised in “overage capital” which will allow the firm to invest in larger deals.

Genstar itself and affiliated entities committed more than $200 million.

“As Genstar approaches its nearly 30-year mark of investing and transforming companies across all economic cycles, the new fund shows the market’s affirmation of the firm’s evolution to an institutionalized partnership that maintains its sector based and change capital investment approach,” Jean-Pierre Conte, managing Director and chairman of Genstar, said in the statement.

Limited partners who committed to the fund include global endowments and foundations, public and corporate pension plans, sovereign wealth funds, financial institutions, and family offices. The quick fundraise was due to re-ups from a strong core of existing investors as well as a select group of new global institutional investors, managing director Tony Salewski said in the statement.

Details of Fund VIII’s fees and strategy were outlined in a February memo from consultant Aon Hewitt to the Nebraska Investment Council, as Private Equity International previously reported. Genstar had a $2.5 billion target and a $3 billion hard-cap for Fund VIII and plans to invest in more deals than its predecessor – about 12 to 14 platform acquisitions, the memo shows.

Fund VIII’s terms are also aligned with the typical private equity fund structure with an 8 percent preferred return and 20 percent carried interest, though it charges 1.75 percent management fee throughout its investment and harvest periods, according to the memo. The fund also has the ability to use a line of credit for up to 30 percent of the commitments, an increase from a 25 percent cap on Genstar Capital Partners VI and VII.

While the firm will focus on deals requiring between $100 million and $400 million of equity, it will be able to write investment cheques over $600 million.

Genstar has made eight investments and exited eight portfolio companies over the last 12 months, according to the statement.

The fund’s predecessor, Genstar Capital Partners VII, closed above its $1.5 billion target on around $2.1 billion in August 2015 after six months of fundraising. That fund received commitments from limited partners including Alaska Retirement Management Board, Public Employees' Retirement System of Nevada and San Bernardino County Employees' Retirement Association.

Evercore helped place Fund VIII and Weil, Gotshal & Manges provided legal advice.

Genstar has about $9 billion in assets under management and focuses on control positions in financial services, software, industrial technology, and healthcare industries in North America, according to the statement.