By many measures, 25 years is a long period of time. In politics, it's more than six US presidential elections, or at the very least three different presidents. Reaching a quarter century in marriage is such a praiseworthy feat that its achievement is connoted as “the silver anniversary”.
In private equity also, 25 years is a very long period of time. More firms have formed, spun out, reformed and dissolved in 25 years than is possible to count. It just about covers the birth of (most of) the industry in the early 1980s to the buyout boom of the mid 2000s. To most general partners, the description “long-term investor” refers to the decade-long lifespan of a typical private equity fund.
To American Securities chief executiveMichael Fisch, 25 years does not seem too long. After all, the mid-market specialist has just closed a $2.3 billion fund with a quarter-century time horizon.
Fisch recently told sister website PrivateEquityOnline.com that the ability to hold investments for such long periods meant the firm had differentiated itself as “people who have the capital, if you will, to put their money where their mouth is and be long-term investors.”
LPs were apparently receptive to the novel fund structure, allowing the firm to surpass its target of $2 billion it began raising for its fifth private equity fund. The New York-based firm closed on $1 billion for its fourth fund in 2004.
Fisch said the firm's traditional limited partner base of high-net-worth families and endowments had returned for the firm's latest vehicle.
Although the fund structure has changed, American Securities' investment strategy will remain unaltered. The firm will continue to invest in North American companies with revenues ranging from $100 million to $1 billion, using only equity and senior debt in its acquisitions.
“We run relative to the competition much less levered capital structures and have a much higher probability of closing deals particularly in today's sometimes troubled financing environment,” said Fisch.
PLATINUM CLOSES SECOND BUYOUT FUND ON $2.75BN
US private equity firm Platinum Equity has closed its latest fund on $2.75 billion, exceeding its initial fundraising target of $1.5 billion. The Los Angelesbased firm, founded in 1995 by entrepreneur Tom Gores, will also make a commitment that will increase the fund's available capital to more than $3 billion. The New Mexico State Investment Council and the Pennsylvania School Employees' Retirement System (PSERS) have committed $100 million and $300 million to the fund, respectively. Platinum Equity Capital Partners II has already invested in at least four acquisitions, which include the $2 billion take-private of metals services company Ryerson.
CD&R SURPASSES HALFWAY MARK ON $7.5BN FUND
US private equity firm Clayton, Dubilier & Rice has raised approximately $4 billion for its latest buyout fund, expected to close on $7.5 billion near the end of the year. The New York-based firm, known for its high-profile stable of operating partners including former General Electric chief executive Jack Welch, began sending out private placement memoranda for its eighth buyout fund late last year. Although existing investors accounted for a significant majority of the raised capital, CD&R developed new relationships with several limited partners, including the South Carolina Retirement Systems (SCRS) and the Teachers' Retirement System of Texas.
BLUE WOLF HITS $100M FIRST CLOSE
BlueWolf CapitalManagement, aNew York-based mid-market buyout firm, has reached a first close on its $250 million debut fund, rounding up commitments of $100 million, according to a source. Blue Wolf is led by founding partners Adam Blumenthal, former first deputy comptroller and chief financial officer for New York City, and JoshWolf-Powers, formerly the managing director in charge of private markets for the New York City Comptroller. The source said six institutional investors have committed to the fund.
LINCOLNSHIRE REACHES $650M FIRST CLOSE
New York-bas ed mid-marke t specialist Lincolnshire Management has reached a first close of approximately $650 million on its fourth fund, according to a source. Lincolnshire Equity Fund IV has a hard cap of $800 million. The close brings the new vehicle well ahead of the $433 million Lincolnshire raised for its previous fund, which held a final close in 2005. Lincolnshire is led by TJ Maloney, who joined the firm in 1993 and became its president in 1998.
NORWEST RAISES $1.7BN ACROSS TWO FUNDS
Norwest Equity Partners (NEP) and Norwest Mezzanine Partners (NMP), affiliated mid-market inves tment vehicles based in Minneapolis, Minnesota, have launched their most recent funds with combined capital commitments of $1.7 billion. NEP IX raised $1.2 billion in commitments and NMP III $500 million, bringing the firm's total capital under management to $4.6 billion. The sole LP for the new funds, as with all Norwest's previous debt and mezzanine funds, was Wells Fargo Bank, which has had a cont inuous relat ionship wi th Norwest since its inception in 1961.
AMERICAN INDUSTRIAL RAISES $405M
New York private equity firm American Industrial Partners has closed its fourth fund targeting midmarket industrial companies on $405 million, slightly north of its $400 million target. The fund is nearly twice the size of its predecessor, which closed on $238 million in 2000. Around two-thirds of the capi tal was rai sed f rom new investors including alternative asset managers FLAG Capital Management, Grove Street Advisors and Parish Capital.
HEALTHCARE COMPANY COVIDIEN LAUNCHES VC ARM
Covidien, formerly Tyco Healthcare, has established a captive venture capital arm to invest in areas of strategic importanc e to the company. The rebranded healthcare products provider, which offers a variety of medical devices and pharmaceutical products to healthcare facilities , spun out of Ty co International in 2007. Investments will be made opportunistically from the parent company's balance sheet, which contains $1 billion in cash. Covidien Ventures will target earlystage investments in emerging technologies applicable to Covidien's product lines. The company hired former Affinity Capital managing director Daniel Sheehan to head the effort.