Genstar may target $3 bln or more in quick return to market

Well, that was fast.

Genstar Capital plans to return to market to raise its eighth flagship fund early next year, potentially targeting $2.5 billion to $3 billion or even higher including the GP commitment, according to people with knowledge of the firm.

The popular firm is expected to hold a “one and done” close by the second quarter, one of the people said.

A first-quarter launch for Fund VIII would represent a quick turnaround for Genstar, which closed Fund VII last year, collecting a bit more than $2 billion to beat its $1.5 billion target.

The firm has deployed capital at a fast clip, making its first investment from Fund VII in October with a strategic investment in PSKW, the Bedminster, New Jersey,  pharmaceutical-services company.

The firm subsequently announced three more acquisitions this year. They include the May purchases of real-estate-software provider Accurent and radio-components supplier Infinite RF Holdings, Inc., as well as the purchase of the IHS Operational Excellence & Risk Management business of IHS Inc.

“They had [a] really faster-than-expected deployment rate,” the person said.

Chris Tofalli, a spokesman for Genstar, declined to comment.

Genstar invests in the North American middle market in healthcare, financial services, software and industrial technology. The San Francisco firm is led by Chairman Jean-Pierre Conte and President Ryan Clark, along with a group of managing directors. The firm had about $5 billion of assets under management as of Dec. 31, 2015, according to its Form ADV.

Returns on Fund VII are too early to be meaningful. As of the end of last year its sixth fund, a $1 billion pool raised in 2012, was generating a 38.97 percent internal rate of return for Public Employees Retirement Association of Colorado.

The firm closed its fifth fund on $1.55 billion in 2007. The partnership was generating a 12.7 percent net IRR and a 1.84 investment multiple as of March 31, 2016, for Regents of the University of California.

Action Item: Genstar’s Form ADV: https://adviserinfo.sec.gov/IAPD/Part2Brochures.aspx?ORG_PK=156932

The Golden Gate Bridge and the skyline of downtown San Francisco on Feb. 6, 2016, prior to Super Bowl 50 between the Denver Broncos and the Carolina Panthers. Courtesy Kirby Lee-USA Today Sports