KSL Running Dry on Dry?

KSL Capital Partners, a Denver-based private equity firm focused on the leisure and recreation sectors, is out raising up to $500 million for a “supplemental” fund to KSL Capital Partners II, the $1 billion vehicle it closed in mid-2006.

Kind of surprising from the outside looking in for two reasons: (1) KSL II was just 15% called down through last September 30, according to The Washington State Investment Board; and (2) KSL has only made three investments since that point: ClubCorp, Western Athletic Clubs and Orion Expedition Cruises.

But regulatory filings indicate that it has at least $200 million committed, from LPs like Washington and the Oregon State Treasury. Probitas Partners is serving as placement agent.

So why does KSL need to get a dry powder dump? The answer may be found in The Sunday Times of London, which recently reported that the firm is one of six bidders for UK fitness club chain Esporta. That entire deal is valued at around £450 million, which sadly translates into nearly $885 million. This includes an enterprise value of around £200 million and another £250 million worth of related real estate.

KSL would surely leverage the deal, but nonetheless might need to deepen its pockets in order to curry favor with seller Simon Halabi, who bought Esporta in 2006 for 500 million from Duke Street Capital (which also is a reported suitor, along with David Lloyd Leisure Group and LA Fitness).

KSL did not return requests for comment.