Lightyear Capital closes second fund(2)

The New York-based firm has surpassed its target goal of $800 million with the closing of its new $850 million fund.

New York-based private equity firm Lightyear Capital has closed its second fund, Lightyear Fund II, at $850 million (€649 million). The firm surpassed its target goal for the fund by $50 million.

Like the firm’s first fund, Lightyear Fund II will invest in financial service companies, including asset management, banking, brokerage, financial technology, insurance and leasing, the firm said in a statement. The new fund will be invested over five years.

“Fund II is already 20 percent invested, and we are actively evaluating multiple investment opportunities consistent with our strategy,” Mark Vassallo, a Lightyear managing director said in the statement. Lightyear has made two investments with the fund, one in Flagstone Reinsurance Holding Company, a Bermuda-based reinsuarance company focused on property catastrophe and other casualty coverage, and another in Delos Insurance Group, a Delaware-based specialty insurance program underwriter. The firm did not disclose the details of either transaction.

Donald Marron, formerly the chairman and chief executive officer of Paine Webber Group, founded Lightyear in 2001 and serves as its chairman and chief executive officer. Its investment team includes Warburg Pincus veteran Stewart Gross, who joined the firm in 2005.  Another managing partner, Richard Sterne, oversaw the fundraising for Lightyear Fund II.

Lightyear sold Telmar Network Technology, a logistics and supply chain broker to the communications industry, to Warburg Pincus for an undisclosed amount last May. Lightyear had bought Telmar in November of 2003 from Stonebridge Partners, which remained a minority investor.

Lightyear closed its first fund at $750 million in 2002. The firm has approximately $3 billion in capital under management.