Tenex closes Fund II on $814 mln

  • Final close comes in 8.5 pct greater than $750 mln hard cap
  • New Jersey, Rhode Island among Fund II LPs
  • Tenex splitting GP commitment between cash, management-fee waiver

Tenex Capital Management closed its second flagship fund on $814 million, according to the firm.

Tenex began marketing the fund to a small group of limited partners last year and held an initial close in January. LPs in Tenex Capital Partners II include the New Jersey Division of Investment and Rhode Island State Investment Commission, Buyouts previously reported.

The firm benefited from strong demand for Fund II, sources said. The $814 million circled in Fund II’s final tally is fully 8.5 percent over the $750 million hard cap disclosed in New Jersey investment memos. New Jersey committed as much as $100 million to the fund at its Jan. 27 meeting.

It’s not clear if the hard cap was raised since New Jersey reported its numbers.

Tenex split its 3 percent GP commitment to Fund II between a cash contribution and a management-fee waiver, according to Rhode Island documents. Many LPs prefer fund managers to commit to their funds in cash, but strong demand gave Tenex the leverage to negotiate for a partial management-fee waiver, sources told Buyouts in February.

Rhode Island backed Fund II for $20 million in January.

Tenex will invest Fund II in companies facing operational distress, often after busted auctions, according to New Jersey documents. This enables the firm to maintain purchase-price discipline and its entry multiples average 6.5x Ebitda, New Jersey staff wrote.

The New York City firm was founded in 2009. New Jersey documents list Michael Green, Varun Bedi, Joe Cottone, Chad Spooner and JP Bretl among its key investment professionals.

Action Item: To see New Jersey’s report on Tenex II, visit http://bit.ly/1M8nqhT

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