The days are looking a little brighter for buyout funds in the market. Having survived the dryspell that plagued the first quarter and most of the second quarter, fund raisers are now finding that they’ve either stumbled into an oasis or an economic recovery.
Indeed, at slightly over one month into the third quarter and fund closings have nearly matched those of the entire second quarter. This quarter so far has seen closings on 10 buyout funds, one mezzanine fund and one co-investment fund – a grand total of approximately $6.8 billion. The second quarter garnered $9.65 billion (including mezzanine funds) with 23 buyout funds and three mezzanine funds. With August and September left to go, fund closings this quarter will almost certainly surpass the total of last quarter.
Not only are fund raisers finding that they can meet their targets, but in some cases, funds are closing above target – seven cases this quarter to be exact. Even more surprising is the fact that four of those funds were debut vehicle of sorts.
Greenbriar Equity Group, for example, this month sealed up its debut fund, which focuses exclusively on transactions in the transportation sector, with $700 million — $100 million more than it targeted. New York-based New Mountain Capital, which kicked off its first-time fund in January 2000, held a final close on $770 million, surpassing its $500 million target. New York-based Quadrangle Group LLC wrapped up its debut fund last month with $1.08 billion, slightly over its $1 billion target.
In the mezzanine arena, Prudential Capital Group also closed a debut fund of sorts. Though a long time mezzanine player, Prudential Capital Partners LP was the group’s first mezzanine fund to include outside investors. It closed last month at $619 million. The fund, which was targeted at $500 million, was closed alongside a $20 million co-investment fund. In the second quarter, mezzanine funds brought in a total of only $714 million.
Veteran buyout firms to hold a close this quarter include Mesirow Financial ($233 million in a first close for Mesirow Private Equity Partners), Banc of America ($517.3 million final close for its European counterpart), American Securities Capital Partners ($650 million final close for its third fund), Warburg Pincus ($2.8 billion first close for Fund VIII) and Morgenthaler ($850 million final close for Fund VII).
Contact Christa Fanelli at <!–a href=Christa.Fanelli@tfn.com