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Investors still back buy-outs as GI Partners closes third fund on $1.9bn

12 Oct 2009

GI Partners, a Trans-Atlantic private equity firm, has closed its third private equity fund on $1.9bn, falling short of its target of $2.5bn. Nonetheless, the closing is a sign that investors are still prepared to back buy-out groups.

The fund size represents more than a 35 per cent increase from the previous $1.45bn fund and received strong support from existing limited partners.

In addition, a number of new institutional investors have committed to GI Partners Fund III, including Florida Retirement System Trust Fund and Teachers’ Retirement System of the State of Illinois in the US, and Capital Dynamics and Partners Group in Europe.

Consistent with the investment strategy of previous funds, the new vehicle will invest in asset-intensive businesses or portfolios of assets in Western Europe and North America where GI Partners can secure control and add value to the underlying assets to promote substantial EBITDA growth, the firm said.

GI Partners also intends to take advantage of distressed situations.

Investments already made by the fund include Care Aspirations, a UK provider of specialist care for severe learning disabilities; Ladder Capital Finance, a US specialty finance company created to take advantage of opportunities in the commercial real estate sector; and FlatIron Crossing, a joint venture with US national regional mall operator Macerich Company.

Mark Tagliaferri, executive managing director, said, “Given the difficult economic environment, we are extremely pleased to have grown our base of new investor relationships by more than 50 per cent and to have secured larger capital commitments from almost all of our existing limited partners. We believe this support stems from our consistent, value-based investment strategy that focuses on acquiring undervalued assets and maximising opportunities within distressed segments of the market.”

The creditors of GI Partners portfolio company Park Resorts last week agreed to restructure the terms of its £325m (€348.4m) debt facilities. The arrangement includes a new £25m (€26.8m) revolving debt facility to finance a five year investment programme in the company’s 37 caravan parks around the UK and the resetting of the covenants of its debt.

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