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MSD Capital to raise PE allocation

A third-party fund is “certainly a possibility of the future”.

MSD Capital, a family office set up to manage the capital of Michael Dell and his family, expects to increase its allocation to private equity as the firm increases the level of PE investing over the next few years.

And while there are no formal plans to establish a dedicated private equity fund, it is a “certainly a possibility for the future”, a source close to the firm told Private Equity International.

MSD Capital recently had two large realisations in ValleyCrest Landscape Companies and OneWest Bank and it would be expected that some of those proceeds would return to the fund’s private equity investments, the source said.

The firm has been investing in private equity since 1998. Its private equity team does not have a private equity-dedicated fund or invest through private equity funds or fund of funds, but invests on a deal-by-deal basis, the source said.

MSD has offered limited partners the opportunity to co-invest in three recent private equity transactions, and expects to continue co-investments in the future, the source said.

When asked about sector focus, the source noted that MSD’s investments have included in business services through Waypoint Leasing, agribusiness through ValleyCrest and financial services through OneWest and is not focused on any one industry.

The firm generally targets private equity transactions of $100 million to $300 million in equity, although it has the flexibility to make investments both above and below that target range, the source said.

Last week MSD announced the hire of Douglas Londal as the firm’s partner and head of private equity investments, as reported by Private Equity International. Londal will be in charge of expanding the firm’s private equity activities.
MSD Capital manages $8.43 billion in assets.