Kelso Ropes in $5.1B
New York firm can now make equity investments as large as $600 million out of its latest vehicle.
July 18, 2008
Kelso & Co. finalized its latest investment vehicle, taking in $5.1 billion in commitments for Kelso Investment Associates VIII, according to a news item from Thomson Reuters’ PE Week Wire. Calls to Kelso were not returned by press time, although the firm’s website confirms that the New York-based private equity group is actively investing the new fund.
According to an executive summary published by the Ohio State University, an investor in the vehicle, Kelso’s previous six funds have generated returns in aggregate of 24% since 1984 through December 2006.
The firm’s latest fund will maintain a similar strategy to previous efforts, namely targeting mid-market companies with an emphasis on manufacturing and service businesses. The firm is aiming to make equity commitments ranging from $50 million to $600 million, with a goal of averaging between four and six investments each year. Kelso is anticipating the new fund will consist of between 20 and 30 companies by the time it is fully committed.
The new vehicle more than doubles Kelso’s previous fund, KIA VII, which closed in 2004 with $2.1 billion of capital, although the firm did not go significantly over its $5 billion cap identified in a Form D filing submitted to the SEC last year.
Investors in the fund include the Los Angeles City Employees' Retirement System, the Alaska Permanent Fund, and the New York State Common Retirement Fund, among others. The latter identified in a published transaction report that Kelso paid a fee to Credit Suisse for placement agent services.
Kelso has not been particularly active on the deal front this year, with just one transaction inked so far – the acquisition of oil and gas production company Shelter Bay Energy in March. But the firm made a number of deals last year, including buyouts of vehicle auctioneer Adesa Inc., petroleum pipeline Buckeye GP Holdings, energy waste management outfit CCS Inc., and iGPS Inc., a maker of plastic pallets.
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