GI Partners Nearing Close on Fund Three

GI Partners next month is expected to close its third fund with more than $2 billion. The focus will be on mid-sized, asset-rich companies based in the United States and Europe. 

GI announced in a recent press release that it has so far raised $2 billion, and we reported in June that it was targeting $2.25 billion. Executives at the Menlo Park, Calif.-based firm originally planned to raised $2.5 billion.

GI Partners picked up a good number of new domestic investors while raising this latest fund but was not as successful in trying to tap sovereign wealth funds.

“That really has to do with the fact that during the time we were marketing, we were competing with commercial banks and investment banks that were trying to recapitalize and were raising billions of dollars from sovereign wealth funds,” says Rick Magnuson, GI’s executive managing director. “And of course I think all of us who are middle market firms were outgunned by the U.S. financial system recapitalizing at the same time.”

GI Partners, which also has an office in London, makes equity and debt investments of between $25 million and $250 million, engaging in traditional buyouts, platform deals, management turnarounds, and direct asset purchases. Sectors of interest include health care, real estate, hospitality, retail, logistics, transportation, media, entertainment, financial services, technology and telecom.

The predecessor fund, GI Partners Fund II, closed in September 2006 with total commitments of $1.45 billion. The firm’s most recent deal came earlier this month when it acquired a 75 percent stake in FlatIron Crossing Mall in Bloomfield, Colo., from The Macerich Partnership LP for $116 million in cash.

Magnuson founded GI Partners in 2000. Prior to that, he was a deputy partner with Nomura Group’s Principal Finance Group in London. Members of the original group that formed GI Partners, initially called Global Innovation Partners, have all invested together since 1994. The California Public Employees’ Retirement System has been an anchor limited partner, providing 95 percent of the capital for the firm’s first fund via a $500 million pledge that it also matched for the second pool.

This story first appeared in Buyouts magazine, where Bernard Vaughan is a senior editor.