Gores Group closes Fund III on $2bn

Despite the tough fundraising environment, Gores was able to bring back a majority of existing LPs and attract some new investors to the fund.

Gores Group, a Los Angeles-based firm, has closed Gores Capital Partners III on $2 billion, exceeding the fund’s $1.5 billion target.

The firm will look to make control investments in mid-market turnarounds, restructurings and distressed situations. Fund III will acquire 12 to 20 portfolio companies with investment sizes around $50 million to $250 million.

While the fund beat its target, the fundraising environment was very challenging, said Jennifer Kwon, vice president of investor relations.

“We were very appreciative to have so many existing investors commit and we were able to get new LPs on board,” said Kwon. “For Fund III, 60 percent is made up of existing investors and 30 percent are new.”

Geographically, 75 percent of Fund III is comprised of North American investors and the remaining 25 percent is split between Europe and Asia, she said.

Fund III has a 1.85 percent management fee during the five year investment period, and 1.5 percent of active investments after the investment period. The fund will also use 80 percent of transaction, break-up and other fees to pay down the management fee.

The firm targets information technology, telecom, industrial, and to a lesser extent, media, healthcare and security businesses. Gores prefers to make investments in the form of common stock, preferred stock, convertible securities, mezzanine debt and/or senior debt.

Gores Group, which was founded in 1987, makes control buyout investments in non-core, underperforming or undervalued businesses in the United States and Europe. The firm closed its second fund on $1.3 billion in 2007 and raised $400 million for its first institutional fund in 2003.