Nearly out of dry powder, Perseus LLC has entered into discussions with investors about raising more money to continue making equity-heavy buyout and growth-capital investments, according to two sources with knowledge of the situation.
The Washington, D.C.-based firm hopes to raise a successor fund comparable in size to Perseus Partners VII, which closed in 2007 on roughly $600 million in commitments. The fundraising process for Perseus Partners VIII got under way about two months ago with top executives at Perseus starting to make calls and visits to prior limited partners, as well as one or two new investors.
The firm plans to hold a first close on Fund VIII sometime in the fourth quarter. The target for the pool will depend on investor appetite at the time of the inaugural closing. At the very least, Perseus hopes to be within $100 million to $200 million of Fund VII’s total capitalization, one of our sources said.
A source said that all, or almost all, investors in Fund VII are expected to re-up in Fund VIII. “It’s not so much a question of ‘if’ but of ‘how large’ their commitments will be given the liquidity constraints of some investors,” the source said.
According to public documents, investors in Perseus Partners VII include the New Mexico Educational Retirement Board, the North Carolina Retirement System, the Massachusetts-based Public Employee Retirement Administration Commission and the University of California.
No placement agent has yet been tapped to assist in the fundraising effort, though one may be hired later in the process to help target select limited partners.
To date, Perseus Partners VII has had two liquidity events, two write-ups, and no write-downs, a source said. Among its exits, the fund earned 3x its invested money on an investment in Westport Innovations Inc., a supplier of products that allow engines to operate on natural gas and other clean-burning fuels.
As of Dec. 31, 2008, Perseus Partners VII had generated a return multiple of 1.08x for the University of California. The firm’s three main target areas include undervalued or distressed investments; biotechnology and medical device businesses; and energy, environmental and engineering technology investments.
Ed note: Perseus LLC is named after the Greek hero that killed Medusa. The image we included is from the firm’s website.