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Veritas storms toward final close on in-demand Fund VI

  • Fund VI nearing final close
  • Targeting up to $3.5 bln
  • Cutting back LPs

Veritas Capital Management, which lost its founder a few years ago, is one of a handful of firms enjoying strong demand for their latest flagship funds, two people with knowledge of the firm told Buyouts.

Veritas in December filed fundraising documents with the SEC, indicating a $3 billion target for Fund VI. One source said, however, the firm is vying for as much as $3.5 billion amid heavy demand.

Fund VI held a first close on an undisclosed amount, one of the people said. Final close could come “any day,” the person said.

Demand for Fund VI is such that the firm cut back LPs’ target allocations, the person said. Whether all LP allocations were cut is unclear.

Veritas couldn’t be reached for comment. The firm invests in middle-market companies that work with government and commercial customers in sectors like aerospace and defense, healthcare, tech, national security, communications, energy and education.

Veritas is moving through the strong fundraising after a few challenging years following the September 2012 suicide of its founder, Robert McKeon.

His death tripped a key-man provision in Fund IV, which at the time had about 46 percent of capital left to invest, Buyouts reported. Fund IV closed on $1.2 billion in 2010. That vehicle was generating a 16.9 percent net internal rate of return as of March 31, 2016, according to Public Employee Retirement System of Idaho performance information.

Fund V launched in 2014 and closed on $1.87 billion, beating its target after only a few months in market. Still in its J-curve period, Fund V was producing a negative 2.55 percent net IRR as of the same date, Idaho PERS data shows.

After McKeon’s death, management of Veritas was taken up by Ramzi Musallam, Hugh Evans and Benjamin Polk. Musallam and Evans are managing partners and principal owners of the firm, according to Veritas’s Form ADV.

Earlier this month, Veritas agreed to buy Harris Corp’s government IT services business for $690 million cash. The deal is expected to close before the end of fiscal 2017.

Action Item: Check out Veritas’s Form ADV here:

In Ostend, Belgium, waves crash against a dam as winds and a spring storm cross the country on Jan. 13, 2017. Photo courtesy Reuters/Yves Herman