Home Banking & Finance PE fundraising doubles in Q2

PE fundraising doubles in Q2

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Greenfield Partners secured nearly $275 million in commitments toward a $1 billion fund, its first since a 2007 fund it raised that is fully invested today.

The Norwalk-based company filed registration papers with regulators even as private equity fundraising more than doubled between the first and second quarter, despite ongoing uncertainty from the fall’s election and the continuing federal reform in the financial sector.

Greenfield is run by Gene Gorab, who previously was with Starwood Capital Group in Greenwich. Since 1997, it has invested about $4 billion across seven separate funds, with recent investments, including the purchase of a group of Maryland office buildings totaling nearly 850,000 square feet of space, and land in Ann Arbor, Mich., and Austin, Texas for future development.

For its part, Greenwich-based Starwood Capital remains active as well, fronting $130 million for a major south Florida beach resort hotel to be called Margaritaville Hollywood Beach, according to the Miami Herald.

Second-quarter fundraising by private equity companies rocketed to $42 billion, up from $20 billion in the first quarter, according to the Private Equity Growth Capital Council. Investment deal volume was off 8 percent to $51 billion and “exit” deals similarly dropped 10 percent to $24 billion.

Exiting August, the private equity industry got a jolt after The Wall Street Journal reported that New York Attorney General Eric Schneiderman is investigating whether companies improperly exploited loopholes to avoid paying taxes – specifically by plowing management fees into new investments eligible for tax breaks. Such fee-waiver conversions can transform a 35 percent tax bill into a 15 percent capital gain, the newspaper reported.

“The current trends in U.S. private equity indicate that, even in the current economic environment, investors have confidence that private equity firms will be able to deploy capital and deliver superior returns over the long run,” said Bronwyn Bailey, vice president of research for the Washington, D.C.-based trade group.

The Private Equity Growth Capital Council says private equity firms invested $53.5 billion in Connecticut companies between 2002 and 2011, and that more than 275 private equity firms are based in the state.

Fairfield County’s cohort of private equity firms had a small flurry of deals entering December, with First Reserve Corp. taking a stake in a Texas chemical company; Brynwood Partners buying into Back to Nature; Catterton Partners acquiring a digital promotions firm in Michigan; and Emil Capital capping a deal for SIPP beverages.

In an August conference call, the CEO of Sturm, Ruger & Co. has been approached by private equity companies hoping to interest the firearms maker in buying a portfolio company.

“The prices tend to be in the stratosphere – they’re really not sustainable for a company that wants to buy and hold,” Ruger CEO Michael Fifer said. “They might make sense for another private equity firm and actually that’s usually who ends up buying them … We’ve taken some sort of cursory looks when people have solicited us at the companies outside of firearms, but I haven’t found anything that looked affordable and attractive.”

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