HM Capital has closed its first fund since returning roughly six years ago to the core mid-market strategy on which it was founded in 1989.
Its Sector Performance Fund closed on $780 million (€494 million), according to a memo to limited partners obtained by PEI. The Texas-based firm closed its previous fund eight years ago on $1.6 billion as Hicks Muse Tate & Furst.
John Muse, the firm's chairman and its only remaining affiliated co-founder, spoke with PEI in March 2005 as HM Capital was preparing to raise the fund. At the time, he said it was likely to target “either side of a billion” and noted that the firm had long since overcome its highly publicised dotcom-era setbacks when it dabbled in telecom deals and real estate.
“We figured out what our success formula was, we got back on it three or four years ago, and we've been driving against it ever since then,” Muse said.
The January 2007 minutes of the New Mexico State Investment Council, a limited partner that committed $30 million to the fund, show investment advisor Aldus Equity Partners stressing that the firm had shed some of the personnel that invested in telecom deals and that HM Capital's current partners “have worked together as a cohesive team since 2001”.
Other investors in the fund include the Los Angeles City Employees' Retirement System, the Oklahoma Police Pension & Retirement System and the Houston Firefighters' Relief & Retirement Fund.
The Sector Performance Fund will focus on mid-market energy, food and media investments. It had already completed six platform acquisitions by June, with “all six platforms making excellent early progress”, the memo said.
The fund's first acquisition of 2008 was the purchase of US oil and gas company TriDimension Energy for an undisclosed amount. The deal was characterised by one partner as a “low-risk oil exploitation play”. HM Capital made a $50 million equity investment in the firm, and agreed to double its commitment over the next three years.
LONE STAR RAISES $10BN FOR DISTRESSED DEALS
The US private equity firm has closed its sixth buyout fund and first real estate fund on a combined total of roughly $10 billion (€6.3 billion), surpassing a $6.5 billion target, sister website PrivateEquityOnline.com learned from a source close to the fundraising. Lone Star Fund VI raised approximately $7.5 billion, while Lone Star Real Estate I garnered commitments of roughly $2.5 billion. The funds will run side-by-side, making global “opportunistic” investments in distressed debt, distressed real estate and real estate entities, according to January 2008 investment committee minutes from the Oregon Investment Council. Their target internal rate of return is 25 percent. The buyout fund will focus on “distressed debt and in asset rich or financially oriented operating companies”, according to the minutes.
WELSH CARSON POSTS $2.5 BN FIRST CLOSE
Welsh Carson Anderson & Stowe (Welsh Carson) has reached a first close on its 11th private equity fund, rounding up a total of $2.5 billion (€1.6 billion), according to an investor source. The New York firm, focussed exclusively on information and business services and healthcare, expects to close on roughly $4 billion by year-end. Welsh Carson's previous private equity fund closed on $3.4 billion in 2005. Among the firm's distinguishing characteristics is its tendency to partner with portfolio company management teams on a repeat basis.
HARBOURVEST GIVES ACCRETIVE $125M FOR DEBUT FUND
Accretive Exit Capital Partners has closed its debut secondary fund on $125million (€74million), raised solely from HarbourVest Partners, while simultaneously acquiring minority interests in five companies from Evercore Capital Partners for $110 million. The remaining dry power will likely be reserved for follow-ons as opposed to new transactions. Evercore agreed the transaction due to solid valuations, retention of control, avoidance of debt structure refinancing and the opportunity to provide some liquidity to limited partners. Accretive targets performing assets with low leverage and good growth potential that can be exited within 24 to 36 months. Accretive is currently looking to raise a second fund of $300 million to $400 million.
INTERVALE CAPITAL CLOSES DEBUT EFFORT
Intervale Capital has rounded up $280 million (€179 million) in commitments for its debut fund, expected to give the US firm some $500 million in purchasing power for mid-market oilfield services deals. The private equity firm was founded by Charles Cherington and Curtis Huff, each of whom had previously established similar private equity firms, Cherington Capital and Freebird Partners. Intervale will only do deals in which the management team reinvests in the company, and looks to take controlling stakes in “oil field service companies that deploy technology geared toward lowering drilling costs or enabling new plays to take place that couldn't otherwise”.
LONGITUDE CLOSES FIRST VENTURE FUND ON $325M
Pequot Capital spinout Longitude Capital has closed its first independently raised venture fund on $325 million (€208 million). The Greenwich, Connecticut and Silicon Valley-based firm surpassed its original target of $250 million and will focus on investments in the life sciences arena. The fund, launched in April last year, will favour early-stage medical device companies and late-stage biotech opportunities, but will also be deployed in recapitalisations and spinouts when appropriate. The firm was co-founded in 2006 by the six-member biotech unit of hedge fund manager Pequot Capital's former venture arm, Pequot Ventures. In March, the remaining members of Pequot Ventures spun out from the parent and reformed as First Mark Capital.
PANTHEON PREPARES TO LAUNCH INFRASTRUCTURE BUSINESS
Pantheon Ventures, one of the world's largest primary and secondary investors in private equity, is developing plans for an infrastructure business, expected to launch later this year. A source familiar with the firm's intentions said it would in time become a fully-fledged strategy to sit alongside its private equity business. It is not clear yet how much the firm, part of US group Russell Investments, plans to raise for the new strategy. It has $22.6 billion (€14.5 billion) in assets under management.
HORSLEY BRIDGE CLOSES FUND IX ON $1.76BN
Fund of funds specialist Horsley Bridge Partners closed its ninth fund on $1.76 billion (€1 billion) several months ago, managing director Fred Giuffrida has confirmed. The growth equity- and venture capital-focussed fund of funds attracted commitments from limited partners including The Indiana Public Employees Retirement Fund, Danish pension PFA Pension and the UK's Railways Pension Trustee. Headquartered in San Francisco, Horsley Bridge has invested with managers including Accel Partners, Benchmark Partners, Terra Firma Capital Partners, Foundation Capital, Index Ventures and BC Partners. The firm closed its eighth general fund of funds on $1 billion in 2005, and its third international fund on $578 million in 2004.
TOPSPIN CLOSES FIRST BUYOUTDEDICATED FUND
Topspin Partners LBO has held a final close for its buyout fund on $132 million (€84 million), following a first close on $115 million in May 2007. It is the successor to Topspin Partners, a $213 million fund closed in 2000 that targeted both venture capital and buyouts. The LBO fund was launched by the three buyout-focussed investment professionals from Topspin's fully committed first fund. The lead investor in this fund as well as its predecessor is James Simons, founder of hedge fund Renaissance Technologies. The limited partner base is made up entirely of family offices and wealthy individuals.
SEVIN ROSEN TO EXTEND FUNDS VII AND VIII
Venture firm Sevin Rosen Funds has asked investors to extend by three years the life of its eighth fund, and by two years the life of its seventh fund, both of which were raised in 2000. The request was due to “the current economic climate, a weak IPO market and a slowing of large M&A opportunities to venture-backed companies”, according to a letter to investors obtained by PEI. InReturn, the firm is waiving any additional management fees. Fund VII closed on $480 million in early 2000 and Fund VIII's size was reduced by nearly one-third, to $600 million, in 2003, which was in line with similar action taken by many of its peers in the post-bubble climate.
MONARCH LAUNCHES FIRST PRIVATE EQUITY-STYLE FUND
Monarch Alternative Capital has launched a private equity-style distressed debt fund, its first independently raised fund since spinning out from private investment firm Quadrangle Group in January. The hedge fund manager and distressed debt specialist is seeking up to $600 million (€387 million) for Monarch Capital Partners, and has already secured a $300 million commitment from a major European pension fund, according to an investor letter obtained by PEI. The new fund will invest primarily in senior and secured debt and selectively invest in higher-risk debt and equity. The fund's hybrid structure will enable Monarch to “invest in opportunities when they are available and hold lower cash balances than are typically held in a hedge fund format”, according to the investor letter.
ONTARIO LAUNCHES $205 M VC FUND OF FUNDS
The Ontario government, in concert with institutional investors, has launched the Ontario Venture Capital Fund, a $205 million (€134 million) venture capital fund of funds managed by Canadian fund of funds manager TD Capital Private Equity Investors. Long-term goals for the fund include job creation, increased levels of institutional investment in venture capital in Canada and making Ontario's venture industry more globally competitive. The government of Ontario contributed $90 million to the fund and five institutional investors added the remainder. The first close was held on 6 June. Additional limited partners will be sought with the goal of holding a second close in late 2008.
HIG AFFILIATE CLOSES $3 BN DISTRESSED DEBT FUND
HIG Capital's distressed debt and turnaround affiliate, Bayside Capital, has closed its second fund on $3 billion (€1.9 billion). Bayside Capital II will be used to provide equity infusions and refinancing packages to small- to mid-market companies experiencing financial hardship. The firm, which shares its Miami headquarters with HIG, will also use the global fund to purchase existing debt on the secondary market. Led by Levin Leichtman Capital Partners veterans Tiffany Kosch and Lewis Schoenwetter, Bayside targets companies with total enterprise values of less than $400 million. Bayside's current portfolio includes majority stakes in US freight servicer Gemini Air Cargo and French cosmetic display company Diam Europe.
ROCKPORT RAISES $453M FOR CLEANTECH
Boston, Massachusetts-based venture firm RockPort Capital Partners has closed its third cleantech fund on $453 million (€289million), slightly above its $450 million hard cap. RockPort defines cleantech as energy and power, advanced materials and process and prevention technologies. The firm targets early-, middle- and late-stage companies. Fund III is yet to make its first investment but the firm has a robust pipeline, co-founder and managing general partnerWilber James said. Fund II, which closed on $261 million in January 2006, is currently 75 percent invested with some capital reserved for follow-on investments.