KPS seeks additional $800m for $1.2bn Fund III

The special situations investment firm is approaching Fund III's existing LPs to increase its capital base for new investments.

KPS Capital Partners is seeking an additional $800 million to add to its $1.2 billion third fund to expand its pool of capital for new investments, sources told PEO.

The firm is not re-opening fundraising but is approaching existing investors for additional commitments to KPS Special Situations Fund III, which closed on $1.2 billion in 2007. During fundraising, KPS had received subscription requests equal to more than four times the fund’s original $1 billion target.

Existing investors have expressed strong interest in making additional commitments to the fund, according to a market source.

New York-based KPS has made several investments from Fund III, including the creation of brewery platform North American Breweries. The platform was created with the acquisitions of Labatt USA from Anheuser-Busch; the High Falls Brewing Company, which makes Genesee and Dundee brands and the licenses for the Seagram’s Cooler Escapes and Seagram’s Smooth malt beverages from the US arm of French company Pernod Ricard.

KPS also acquired assets from china and crystal maker Waterford Wedgwood, which was in administration in the UK. The firm had also battled to acquire china maker Lenox Group out of bankruptcy, but was bested by a $100 million offer from fellow New York-based firm Clarion Capital Partners.

KPS closed it third fund in June 2007 after receiving more than $4 billion in commitment requests. At the time, Mac Hofeditz of Probitas Partners, which served as placement agent for the fund, said “limiting the fund’s size in the face of such extraordinary demand is rare, if not unprecedented, in my experience, and is indicative of KPS’ disciplined approach to investing capital and managing its franchise”.

Investors in the third fund include the California Public Employees’ Retirement System, the Denver Public Schools Retirement System, James Irvine Foundation, MC Financial Services, New Jersey Division of Investment and the State of Connecticut Retirement & Trust Funds.

KPS’ second fund closed on $404 million in 2004. The firm went through a staff restructuring prompted by the 2005 departure of four former investment professionals, including principal Stephen Presser. Presser, along with Daniel Collin, Justin Hillenbrand and Philip Von Burg, left KPS to form Monomoy Capital Partners, focused on distressed and underperforming mid-market companies.