Private equity firm Vestar Capital Partners said on Monday it had wrapped up fundraising for its sixth fund, securing only $804 million from investors, a fraction of the $3.5 billion it was hoping to raise three years ago.
Vestar's fundraising woes highlight how private equity investors are becoming increasingly selective in their commitments to fund managers. Money is piling into buyout firms with strong track records at the expense of laggards.
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Vestar's latest fund, Vestar Capital Partners VI, was looking to raise $3.5 billion, according to a presentation on the website of University of Missouri System, an investor.
But the firm's predecessor fund, Vestar Capital Partners V, which raised $3.7 billion in 2005, was marked at its investment cost as of the end of December 2012, according to Washington State Investment Board, another Vestar investor.
Private equity funds that completed fundraising in the second quarter of 2013 secured a total of $122 billion, the highest amount since the fourth quarter of 2008, although the number of these funds went down to 154 from 241 a year ago, market research firm Preqin said on Monday.
Just ten private equity funds accounted for 55 percent of the capital raised in the second quarter according to Preqin, including blockbuster funds from Silver Lake Partners LP, Riverstone Holdings LLC and Cinven Ltd.
Vestar said it had promoted two of its co-founders, Norman Alpert and Robert Rosner, to co-presidents. It lost another co-founder Sander Levy, earlier this year, who left to help start another buyout firm, Bridge Growth Partners LLC.
Vestar Capital Partners VI will make equity investments in the range of $50 million to $150 million in U.S.-based middle-market companies that have value, including debt, ranging from $250 million to $750 million.
Vestar's current and past investments include consumer and pet food company Del Monte Foods Co, financial advisory and investment banking firm Duff & Phelps Corp and frozen food maker Birds Eye Foods Inc.
(Reporting by Greg Roumeliotis in New York; Editing by Tim Dobbyn)