KarpReilly Raises $200 Million From Four Investors

KarpReilly LLC, a newly formed mid-market buyout firm, has held a first close on its first fund, according to a source familiar with the situation. The firm, based in Greenwich, Conn., has received $200 million in commitments for KarpReilly Capital Partners LP, anchored by commitments from JPMorgan and Blackrock. In raising its debut fund, founders Alan Karp and Christopher Reilly only contacted an initial pool of six investors, receiving commitments from four.

Now the firm is marketing to a broader pool of investors to raise the final $50 million to meet the fund’s goal of $250 million, the source said. According to a regulatory filing, the firm incorporated in December of 2007 and had the $200 million lined up in April of this year.

Karp and Reilly were partners at mid-market buyout firm Saunders Karp & Megrue for years before it was purchased by Apax Partners in 2005. The duo left in late 2006 as Apax was expected to wrap up its Apax Excelsior VII fund. Karp’s co-Ceo, John Megrue, remains on as the head of Apax’s U.S. private equity operations.

Even though its KarpReilly’s first fund, the firm can market the track records of its partners based on the performances of Saunders Karp’s three funds. According to the source, the firm’s first fund had a blockbuster performance, second fund went south on bad industrial investments, and third fund is performing ok. (This would be a change from a March 2007 report from The Deal, which stated that the fund had a negative 7.6% IRR; I could not find evidence of SKM Equity Fund III in CalSTRS or UTIMCo’s records to confirm either, however.)

KarpReilly writes $10 million to $75 million equity checks to companies in the consumer, health care services, business services, retail, restaurants and building products industries. The firm’s web site boasts a large portfolio of companies of which Karp and Reilly hold board seats; the companies were purchased during the duo’s time at Apax.

Since its formation, KarpReilly made investments in Slant, Inc., a designer of women’s plus sized apparel, and Tina Turk, a contemporary Los Angeles-based apparel designer.