The pool, Grey Mountain Partners Fund II LP, closed Monday. Investors include large funds-of-funds within banks and East and West coast pension funds, says Jason Urband, a Grey Mountain associate who declined to give names.
The firm’s first fund raised $130 million in 2004. All of the pool has been invested and Grey Mountain has returned the capital to its LPs, he says. Fund I has an IRR of more than 40%, Urband says.
Harken Capital Advisers and Jefferies & Co., the investment bank, served as Grey Mountain’s placement agents for Fund II. Proskauer was their law firm.
Grey Mountain did not have typical institutional LPs investing in its first fund and instead relied on one very large industrial conglomerate, he says. The same conglomerate served as a cornerstone for its second fund, he says.
Fundraising for Fund II was more difficult, Urband says. Grey Mountain began marketing for the pool during the financial crisis and held its first close in the middle of 2009. “It was a bad fundraising environment,” he says.
Fundraising in 2010 has also been sluggish. Global PE fundraising has dropped 23% year-to-date to $78.6 billion, according to data from the Private Equity Growth Capital Council. However, Grey Mountain was “able to get it done,” Urband says.
Boulder, Colo.-based Grey Mountain invests in smaller middle market companies in sectors such as diversified manufacturing, business services as well as food and beverage. It typically invests $20 million to $40 million equity per deal.