This article originally appeared at the web site of Buyouts magazine, where Bernard Vaughan is an Associate Editor.
CapitalSouth Partners has extended the target closing date for its third fund a full year because of market turmoil.
Buyouts reported in March 2008 that the Charlotte, N.C.-based firm was set to close CapitalSouth Partners Fund III LP with a target of $330 million in May 2008. But in spring of last year the managers of the fund saw prospective investors were starting to delay commitments amid the growing economic uncertainty so they decided to extend the fundraising to May 2009, a source familiar with the effort told Buyouts. CapitalSouth, which invests in lower middle-market companies, began raising the fund in May 2007.
No investors have reneged on previous pledges, however, and the fund has picked up several new investors this time around, such as the Kentucky Teachers Retirement System, SunTrust Bank and HSBC, our source said. In all, the firm has about 80 limited partners.
The firm has raised its target to $350 million for the fund; as of Jan. 5 it had raised $300 million.
The delay illustrates how difficult fundraising has become for buyout firms of all sizes since the credit crunch seeped into the market in the latter half of 2007. Many larger buyout firms, such as Madison Dearborn Partners and The Blackstone Group, have reportedly cut back targets on funds. Others have put specialized funds on hiatus, such as The Riverside Company’s second micro cap fund (though it should be noted that Riverside has been successful raising fresh North American and European buyout funds). And others, such as Permira and TPG, have allowed LPs to pull back on commitments. Fundraising for U.S. buyout and mezzanine firms fell roughly 13 percent in 2008 to $259.1 billion, down from $297.2 billion a year earlier.