Ripplewood preps $2.5bn fundraise(3)

Seven years after closing on its previous US buyout fund, the New York firm led by Tim Collins is approaching LPs about a new fund and co-investment vehicle.

Ripplewood Holdings, the pioneering New York private equity firm led by Tim Collins, is back in the market with a new US-focused fund, which has a target of $2.5 billion, according to a source.

The firm will also seek to raise a separate co-investment vehicle to draw from in doing buyout deals.

The co-investment fund is in line with Collins’ desire to have a designated pool of capital to draw from for larger deals. In a recent interview with Private Equity International magazine, Collins said he wanted to avoid “scrambling” to pull together capital for large deals. Ripplewood recently announced the acquisition of Readers’ Digest, a media company, for $2.4 billion, and syndicated out a portion of the equity in that deal.

The last US-focused Ripplewood fund, Ripplewood Partners II, closed in 2000 on $1.2 billion.

In the intervening years, Collins surprised many in the market, including many of his LPs, by converting another Ripplewood fund, the Japan-focused RHJ Industrial Partners, into a holding company listed on the Brussels Euronext exchange.

Ripplewood has also encountered some turnover among senior investment professionals. In 2005, Ian Snow left to co-found SPG Partners, a middle-market private equity firm currently in fundraising mode. Earlier this year, Peter Berger, Frank Baker and Jeffrey Hendren left Ripplewood to oversee a private equity programme for hedge fund giant SAC Capital.

At the same time, Collins has beefed up the executive firepower at his firm by bringing on board Harvey Golub, the former chief executive officer of American Express, as executive chairman of the private equity firm. In Europe, Ripplewood has hired star banker Leonard Fischer, formerly of Credit Suisse, to oversee the investment of RHJ, primarily in Europe, Asia and the Middle East.

The new fundraising is for a vehicle that will primarily target private equity deals in the US. It will seek out “industries undergoing change”, according to the source.

Collins founded Ripplewood in 1995 after having worked at Onex, the Toronto-based private equity firm.

The firm is perhaps best known for its lead involvement in the acquisition of Shinsei Bank, the Japanese bank that has been called by The Carlyle Group’s David Rubenstein one of the best private equity deals of all time.

Collins is known for his unorthodox strategies and deep research into out-of-favour sectors.