Gores Group targets $300m for small-cap fund

The firm’s $2.1bn third fund will co-invest in 25% of all transactions of Gores Small Capitalisation Partners, which will include a GP commitment equal to 5% of all LP commitments.

The Gores Group is targeting $300 million for its first small-cap fund, Gores Small Capitalisation Partners, which also has a $300 million hard-cap.

The Small Capitalisation fund will invest primarily in US businesses with annual revenues of less than $300 million and earnings before interest, tax, depreciation and amortisation of less than $20 million. Gores’ small-cap investment team has “extensive experience in special situations, pursuing the same strategy as the larger funds of making control investments in turnarounds, distressed situations, restructurings, carve-outs and value-oriented opportunities”, according to documents from The San Diego County Employees' Retirement Association, which is considering making a $30 million commitment to the fund.  San Diego previously committed $75 million to Gores Capital Partners III, which closed on $2.1 billion in February.

Gores Group was unavailable for comment at press time.

The Small Capitalisation fund has a 1.85 percent management fee during the investment period, which coincides with GCP III’s investment period and ends in August 2014. After August 2014, the fee will change to 1.5 percent of active commitments. Gores Group will commit at least 5 percent of the aggregate LP commitments, and GCP III will co-invest 25 percent of all transactions, up to $100 million.

Last week, Gores Group purchased Texas-based Alpheus Communications, a fiber network and data center operator, for an undisclosed sum.

Gores Group was founded in 1987 by chief executive officer Alec Gores. The firm oversees $3.8 billion in capital commitments across its three buyout funds.