Lion Capital raises $1.35 billion for third fund

Lion Capital, a London-based private equity firm, has raised about EUR1 billion ($1.35 billion) for its third buyout fund. The overall target is EUR2 billion. Lion has around 40 backers, nearly all of whom were expected to invest in the new fund. Lion’s holdings include breakfast cereal maker Weetabix, noodle bar chain Wagamama, and, a recent acquisition, French frozen food retailer Picard Surgeles.

(Reuters) – Private equity firm Lion Capital is closing in on its first fundraising milestone after raising about 1 billion euros ($1.35 billion) for its third buyout fund, people familiar with the situation said.

The London-based buyout house, which counts breakfast cereal maker Weetabix and noodle bar chain Wagamama among its consumer-focused investments, was near a first close after gathering about half its 2 billion euro target, one source said.

A first close allows private equity firms to start investing the fund in new deals, while still raising further capital.

Lion Capital declined to comment.

Its second buyout fund — 2 billion euros raised in 2007 — is fully invested after its purchase of French frozen food retailer Picard Surgeles from BC Partners this summer.

The latest fundraising milestone will be welcomed by rivals such as BC Partners and Montagu Private Equity, both eyeing new funds, as a sign of appetite among private equity investors who took a more cautious approach following the downturn.

Lion has raised funds rapidly and fairly easily from existing investors, a second source familiar with the situation said. It has some 40 backers, nearly all of whom were expected to commit capital to the new fund.

But it was expected to have to win new investors to meet its target as investor commitments to buyout funds are getting smaller.

The new fundraising is not being achieved without some concessions on fees either.

Lion will charge a management fee 1.75 percent on the first 1.5 billion euros it raises, dropping to 1.5 percent on any capital raised above that, the first source said. The firm charged a flat 1.75 percent on its second buyout fund.

(By Simon Meads and Victoria Howley. Editing by Dan Lalor)