Versa collects $650m for Fund II

The distressed and turnaround specialist has made one investment from Fund II and is actively looking for opportunities, but many of the potential deals in the market have a ‘very high level of urgency’.

Versa Capital Management has closed its second fund on $650 million for investments in distressed, turnaround and special situation investments in the mid-market.

The firm, which closed its first fund in 2005 on $300 million, closed Fund II above its original target of $600 million. Fundraising for Fund II took about a year.

The second fund has many returning LPs and several new institutions, according to Paul Halpern, partner and general counsel with Versa. Versa’s LP base includes public and private pensions, endowments, family offices and wealthy individuals.

The Pennsylvania Public School Employees’ Retirement System and the Pennsylvania State Employees’ Retirement System are LPs in Fund II.

Versa has made one investment from the new fund, acquiring Bob’s Stores, a 34-store chain of department stores focusing on active wear, foot wear and casual apparel, in 2008.

Versa focuses exclusively on distressed and turnaround situations in the mid-market but is “industry agnostic”, Halpern said. The firm considers companies with revenues between $100 million and $1 billion to be mid-market.

Versa has a “wide and deep” deal pipeline with “several opportunities that could very well become live investments in our pipeline right now”, Halpern said. Much of the deal flow Versa is seeing involves sellers with a “very high level of urgency … it is generally the weaker targets that have that extremely high level of urgency”. He added: “The deals without a very high level of urgency are not coming to market yet.”

Versa has only had its current name since 2007. Before, the firm was called Chrysalis Capital Partners. Chrysalis was established in 1992 as a turnaround and restructuring advisor. Chrysalis evolved into distressed debt investing on a deal-by-deal basis before moving into the full private equity model, Halpern said.