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Kelso collects $1.3 bln for first close on Fund IX

Kelso & Co. has collected about $1.3 billion for a first close on its ninth fund, according to two people with knowledge of the situation.

The firm, which is targeting $2.5 billion for Fund IX, sent letters to LPs about the first close in early November. Kelso focuses on middle-market buyouts in energy, transportation, logistics, financial services and healthcare.

[contextly_sidebar id=”MYKEe9zduxsZZ7smxyBiCTa3ft5QOfDA”]It aims to wrap up fundraising sometime in the second quarter next year, one of the people said.

Kelso could not be reached for comment.

“They’ll get to the target,” said a Kelso limited partner who asked not to be named. ”They’ve got some loyal LPs and they’ve made a lot of money for a lot of folks over time.”

Kelso launched Kelso Investment Associates IX LP in May, a source told peHUB sister publication Buyouts in a previous interview.

Fund IX will include a 20 percent GP commitment, which is almost unheard of, peHUB reported in August. It’s not clear if the commitment will be in the form of management fee waivers or straight cash from the GP.

“This level of commitment exceeds the typical amount managers commit in percentage terms and provides a strong alignment of interests,” states an investment memo from the Maine Public Employees Retirement System, which has committed $60 million to the fund.

Kelso also plans on making about $500 million in co-investment opportunities available to LPs, according to the investment memo.

Kelso raised $5.1 billion for its Fund VIII in 2008. That fund produced a 6.32 percent IRR and a 1.12x multiple as of Dec. 30, 2013, according to the Texas County & District Retirement System.

The Maine investment memo stated that “Kelso’s eighth fund is anticipated to deliver solid returns on a cash-on-cash basis, despite taking a little longer to do so.”

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