KPS Capital Partners, a leading special situations private equity firm, has announced the first and final closing of KPS Special Situations Fund III, a USD1.2bn fund focused on controlling
KPS Capital Partners, a leading special situations private equity firm, has announced the first and final closing of KPS Special Situations Fund III, a USD1.2bn fund focused on controlling investments in turnarounds, restructurings, bankruptcies and other special situations. KPS received commitment requests of more than four times the fund’s target of USD1bn.
KPS Fund III is the third oversubscribed institutional private equity fund raised by KPS over the past 10 years. Investors in the fund include leading public and private sector pension funds, funds of funds, major financial institutions, endowments and foundations, and family offices from North America, Europe and Asia. The investment period for KPS Fund III will commence following the conclusion of KPS Special Situation Fund II’s investment campaign.
Says KPS co-founder and managing partner Michael Psaros: ‘We are delighted by the positive reception KPS Fund III received from the global investment community. The demand for our new fund reflects the success of our investment strategy, differentiated deal flow and the long-term continuity and depth of our senior investment team. We are gratified by the support we received from such a prestigious group of returning and new limited partners.’
The investment team will be led by co-founders and managing partners Michael Psaros and David Shapiro, partners Raquel Palmer and Jay Bernstein, and an expanding group of experienced investment turnaround professionals. Stephen Hoey will serve as partner, administration and chief financial officer. Psaros and Shapiro have worked together as a team for almost 16 years, with Palmer for more than 12 years, and Bernstein for eight years.
Paul, Weiss, Rifkind, Wharton & Garrison served as legal counsel in the formation of KPS Fund III. Mac Hofeditz of Probitas Partners, which acted as placement agent for KPS Fund III, says: ‘The strong demand for the fund is a testament to KPS’s proven turnaround expertise, consistent top-decile results, unique deal flow and the continuity of its partnership and core investment team.
‘Limiting the fund’s size in the face of such extraordinary demand is rare, if not unprecedented, in my experience, and is indicative of KPS’s disciplined approach to investing capital and managing its franchise.’
The KPS Special Situations funds have a total of more than USD1.8bn in committed capital focused on constructive investing in restructurings, turnarounds and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand-alone entities to operate divested assets; and recapitalised highly leveraged public and private companies.
The KPS investment strategy targets companies with strong franchises that are experiencing operating and financial problems. The firm invests its capital concurrently with a turnaround plan predicated on cost reduction, capital investment and capital availability. Typically, the KPS turnaround plan is accompanied by a financial restructuring of the company’s liabilities.
