WL Ross struggles to raise new fund

The private equity firm's difficulties rest on two issues. First, there are concerns about who will succeed founder Wilber Ross Jr., who is 73. Although Ross has stressed his commitment to the firm - which he sold to Invesco in 2006 - steps have been taken to give investors more protection should he step down. When WLR Recovery Fund V first entered the market, Ross was not designated as the sole key man, The WSJ noted.

Second, the global fundraising environment has becoming challenging as investors reassess their private equity exposure at a time of economic instability. It is suggested that LPs will focus on industry leaders, leaving many smaller players without allocations. Prior to the Invesco acquisition, WL Ross & Co's funds generated returns of more than 2-3x, but the performance of the $4 billion fourth fund, raised in 2007, has been less impressive.

A host of leading US and European buyout firms are expected to launch their latest round of mega-funds in the second half of 2011 - the first time many have tapped the market for large sums of money since before the global financial crisis. The Carlyle Group, Bain Capital, KKR, Vestar Capital, Thomas H. Lee Partners, Apax Partners, Permira, EQT Partners and BC Partners are among those tipped to seek investment alongside a host of leading venture capital players.

If the recent experiences of EQT Partners are anything to go by, Asian LPs - and sovereign wealth funds in particular - are likely to play a far more significant role than in years past.

EQT Partners closed its sixth European buyout fund at EUR4.75 billion ($6.5 billion), with Asia Pacific LPs accounting for 23% of commitments, up from just 5% in the firm's previous vehicle. According to people familiar with the situation, Chinese investors alone had been interested in putting up 15% of the total capital. Middle East investors contributed another 5% as, for the first time ever, non-European investors failed to account for the majority of capital in an EQT fund.

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• Topics
• Fundraising
• North America
• LPs
• USA
• Fundraising
• buyout
• WL Ross & Co.
• EQT Partners
• LPs