CHEMICAL ROMANCE

Barry Siadat is back with a boutique merchant bank devoted to speciality chemicals and materials. Using a word associated in chemistry with the bonding process, his latest venture is called the Valence Group.

The ability to focus exclusively on the niche chemicals industry in the smaller end of the mid-market is the main reason Siadat cites for leaving the New York mid-market firm he co-founded in 2000, Arsenal Capital. Siadat, formerly an executive at AlliedSignal/Honeywell International, founded Arsenal with ex-Thomas H Lee partner Terrence Mullen.

In September last year, Siadat went on to found SK Capital with Jamshid Keynejad, formerly president of Signet Diagnostic, a Florida-based chain of radiology imaging centres and outpatient services that Keynejad acquired, built up and later sold to Investcorp, a spokesman said.

“In December we added significant investment banking capability headed by Telly Zachariades, who was a senior managing director at Bear Stearns,” Siadat told sister website PrivateEquityOnline.com.

Though SK Capital has a few deals pending, it will use the Valence name going forward.

In addition to M&A advisory services, Valence sponsors controlling private equity investments in the lower mid-market. Its sweetspot will be companies with total enterprise value of $150 million (€96 million), equating to equity cheques ranging from roughly $20 million to $40 million.

“We're focussing on niche players, looking for businesses that have strong positions but perhaps have been neglected to some extent,” he said. The non-core assets of large corporations and family businesses experiencing generational change will be primary targets.

Like Arsenal, Valence will work to improve businesses' operations by bringing in strategic and operational resources, making investments to grow companies both organically and via add-on acquisitions.

organically and via add-on acquisitions. Its first deal was the acquisition of Aristech Acrylics, which makes acrylic sheets and solid surface products for applications including hot tubs and showers, which was purchased from Mitsubishi for an undisclosed amount.

Valence has a six-person team in New York and 10 investment professionals globally.

“We're trying to get our London office organised and we're in the process of setting up our Shanghai office shortly because this is really a global business, specialty chemicals,” Siadat said.

Valence is currently investing private capital and will likely begin a formal fundraising process this summer.

KKR RAISES $17.6BN GLOBAL FUND
Kohlberg Kravis Roberts has closed its global buyout fund, KKR 2006, on approximately $17.6 billion (€11.2 billion). The fund has been marketed for at least two years and has garnered commitments from limited partners including the Oregon Investment Council, the Pennsylvania State Employees' Retirement System and KKR Private Equity Investors, the buyout firm's Euronext-listed investment fund. KKR 2006 will invest primarily in large cap companies in North American and European markets, making equity investments ranging from $150 million to $600 million, according to January 2006 minutes from the Oregon pension.

BLACKSTONE CLOSES RECORD $10.9BN REAL ESTATE FUND
The Blackstone Group has closed its ninth real estate fund, Blackstone Real Estate Partners VI, with capital commitments of $10.9 billion (€7 billion), the largest private equity real estate fund raised to date. Blackstone has raised a total of $25.7 billion in real estate funds since the firm's inception in 1985. The firm was recently voted North American Firm of the Year and awarded Global Deal of the Year by the readers of sister magazine Private Equity Real Estate in the 2007 Global PERE Awards. It also won the North American Exit of the Year and North American Fundraising of the Year categories.

SFW CLOSES DEBUT FUND ON $300M
SFW Capital Partners has closed its first fund with more than $300 million (€195 million) in commitments for investment in mid-market healthcare and industrial companies. The Rye, New York-based private equity firm was founded in 2006 and has yet to make its first investment but intends to invest $15 million to $75 million of equity in established companies with a history of profitability. The firm invests in select segments of the healthcare and industrial industries, focussing on “measurement and diagnostics businesses and highly engineered industrial products”, according to the company website.

TECHNOLOGYCARLYLE CLOSES $1.35BN DISTRESSED CREDIT FUND
The Carlyle Group raised $1.35 billion (€860 million) for Carlyle Strategic Partners II, its second fund to focus on distressed and corporate opportunities. The fund's predecessor closed on $211 million in 2004 and is currently fully invested. The vehicle, which was targeting $500 million, will invest in the debt of “operationally sound, financially distressed companies” with an aim to obtain influence or control, Carlyle said. Its mandate allows investment throughout the capital structure including bank loans, public debt and public and private equity. It has already begun investing.

CADENT ENERGY PARTNERS CLOSES $473M SECOND FUND
Cadent Energy Partners has closed its second private equity fund on $473.3 million (€303 million), surpassing its initial target by nearly $100 million. The Rye Brook, New York-based firm launched Cadent Energy Partners II in September last year. The fund's limited partners consist of university endowments, pensions, charitable endowments and a mix of other institutional investors. It will invest across the energy industry, utilising a buy-andbuild strategy. Cadent generally commits between $25 million and $50 million per investment. Cadent's first fund closed on $223.9 million in 2005. The firm is headed by managing partners Paul McDermott and Bruce Rothstein, who spun out from RBC Capital Partners in 2003.

CMEA VENTURES CLOSES ON $400M
CMEA Ventures has closed its seventh fund on $400 million (€257 million) after less than a year of marketing. The fund will target the energy and materials, information technology and life science sectors. The San Francisco-based firm's previous such fund closed on $300 million in 2004. Prior to Fund VI, CMEA raised separate funds dedicated to technology and life sciences. The firm was founded in 1989 as a side fund of Menlo Park, California-based venture capital shop New Enterprise Associates, becoming independent in 1997. Closure of its seventh fund brings its assets under management to more than $1 billion.

INVESCO SPINOUT RAISING $350M FUND
Invesco Private Capital spinout Vedanta Capital is raising a $350 million (€227 million) fund, according to documents obtained by PEI. The fund will make a diverse range of investments, primarily in the US, including growth equity, earlier stage investments, small buyouts, recapitalisations, spinouts and PIPEs. Target sectors include information technology, life sciences, consumer and technology enabled energy businesses. New York-based Vedanta, which is described in fund marketing materials as a “diversified venture capital concern”, was launched in May 2006 by former Invesco executives Parag Saxena, Alessandro Piol and Howard Goldstein. Investments to date from the fund include oil and gas location technology company Terralliance and cardiac imaging company Point Biomedical.

CALSTRS AGAIN TAPS INVESCO TO MANAGE $200M FOF MANDATE
The $174 billion (€112 billion) California State Teachers' Retirement System, the second-largest public pension in the US, has committed $200 million to a “next-generation” fund of funds managed by Invesco Private Capital, its second such investment fund managed by the publicly listed firm. CalSTRS' New and Next Generation Manager Fund II will invest in private equity partnerships raising their first, second or third institutional fund. It is nearly identical to a $100 million next-generation fund CalSTRS launched in 2005, also managed by Invesco. CalSTRS currently manages roughly $17.72 billion in alternative assets and increased its overall allocation to private equity to 8 percent in December.

FOUNDATION CAPITAL CLOSES $750M FUND
Foundation Capital, a Silicon Valleybased venture firm, has closed its sixth fund on $750 million (€478 million). Approximately $250 million will be allocated to investing in cleantech. Foundation began investing in cleantech in 2003, making investments in companies including eco-friendly materials firm Serious Materials and clean food and water solutions company Purfresh. The firm focusses on five sectors: enterprise software and on-demand services; networking, storage and telecommunications; semiconductor and electronic design automation; consumer; and cleantech. Foundation's previous fund closed on $525 million in May 2006. The firm currently has more than $2.4 billion in assets.

LEHMAN TARGETS $1BN FOR DEBUT INFRASTRUCTURE FUND
Lehman Brothers' merchant banking arm is raising a $1 billion (€627 million) infrastructure fund, its first foray into the booming strategy, sister website PrivateEquityOnline.com has learned. Lehman's infrastructure unit, directed by Emil Henry, a former assistant secretary for the US Treasury Department, just began marketing the fund. Investor response is so positive that the investment bank may raise the fund's initial target to $2 billion, an industry source said. Its move into infrastructure comes as investment banking rival Goldman Sachs looks to raise $7.5 billion for what may be the largest-ever infrastructure vehicle raised by a North American firm. GS Infrastructure Partners II will focus on core infrastructure sectors, with an emphasis on mature transport and utility opportunities in North America and Europe, a separate source familiar with the fund told PEO. Both Lehman and Goldman declined to comment.

PROVIDENCE LPS FLOCK TO DEBT FUND
Providence Equity Partners has joined the growing number of big buyout firms launching distressed credit funds to capitalise on market turbulence – and in many cases buy up their own LBO debt at a discount. The US firm went to market with a media- and communications- debt fund just weeks ago, and held a first close after 20 days, a source familiar with the situation told PrivateEquityOnline.com. Investor interest is causing it to consider raising the hard cap to $1 billion (€630 million) from $700 million. Among other things, the fund will allow Providence to buy back debt associated with its own deals, such as the pending $52 billion buyout of Canadian telecom giant BCE. It will only be allowed to do so, however, during certain time windows pursuant to regulatory rules.

FTVENTURES RAISES $512M FOR FUND III
The US venture firm's third growth capital fund closed on $512 million (€324 million), missing its $600 million target but still a 21 percent increase over its previous fund, which closed on $423 million in September 2001. Fund III began its official marketing period in March 2006, and was placed by Sparring Partners Capital in North America and Triago Partners in Europe and the Middle East, each of which had limited mandates. The fund's limited partner base is heavily populated by financical services-related firms including AIG, Lloyds TSB, Nomura, Deutsche Bank, Wachovia and BNP Paribas. New “traditional limited partners” include New York City Retirement Systems, the New York State Common Retirement Fund and Kamehameha Schools, FTVentures said.

HRJ CLOSES $195M SPECIAL SITUATIONS FOF
The San Francisco-based fund of funds firm has closed its second special situations and turnaround vehicle on $195 million (€123 million). Founded in 1999 by former NFL '49ers stars Ronnie Lott and Harris Barton, HRJ manages more than $2.3 billion. Formerly known as Champion Ventures, HRJ initially invested solely in venture funds but has expanded into private equity and hedge funds in recent years. In March, HRJ closed a real estate fund of funds on $155 million.