Kelso’s $3.25B Mid-Market Buyout Fund Closes

Kelso & Company Exceeds Target, Closing $3.25 Billion Mid-Market Buyout Fund

New York – In a significant move within the private equity landscape, Kelso & Company LP, a firm concentrating on middle-market investments, has successfully closed its latest fund, Kelso Investment Associates XI, and its associated funds. Capital commitments totaled $3.25 billion, exceeding the initial target. This accomplished buyout fund closure underscores investor confidence in kelso’s strategy and the continued attractiveness of middle-market opportunities.

Kelso & Company’s Successful Fundraise: What It Means

The oversubscribed fund highlights the ongoing appetite for private equity investments, even amidst fluctuating economic conditions. Kelso’s ability to not only meet but exceed its fundraising goal signals a strong endorsement of its investment approach and track record within the middle-market sector.

Partners and employees at Kelso demonstrated their commitment by contributing over $400 million to the fund. This significant internal investment represents a General Partner (GP) commitment exceeding 12%. Further attesting to investor confidence, the fund witnessed a remarkable 95% re-up rate from investors in Kelso’s previous fund.

Fundraising Timeline and Key Milestones

The fundraising process for this new vehicle commenced in 2021, achieving its initial close in September of the same year. By March 2022, reports indicated that Kelso had already secured nearly $2 billion, with plans for a final close slated for the second half of 2022.

Led by co-CEOs Chris Collins and Frank Loverro, New york-based Kelso has a rich history dating back to 1980. To date, the firm has raised a total of 11 private equity funds and deployed approximately $19 billion of equity capital across more than 140 companies.

Debevoise & Plimpton provided legal counsel for the fundraise and the formation of Fund XI.

Understanding The Middle-Market Focus

Kelso & Company’s emphasis on middle-market investing has proven to be a successful strategy. these companies, typically smaller in size than large corporations, often present unique growth opportunities and can benefit significantly from private equity investment and operational expertise.

Did you Know? Middle-market companies are frequently enough family-owned or closely held, and they play a crucial role in local economies.

Key Facts About Kelso Investment Associates XI

Feature	Details
Fund Name	Kelso Investment Associates XI
total Capital Commitments	$3.25 billion
GP Commitment	Over $400 million (over 12%)
Re-Up Rate	95% from prior fund investors
Legal Counsel	Debevoise & Plimpton

Pro tip: When evaluating private equity firms, consider their track record, investment focus, and the level of commitment from their partners and employees.

What impact do you think this fund will have on middle-market companies?

How might current economic conditions affect future private equity fundraising?

The Enduring Appeal of Private Equity Funds

Private equity Funds serve as vital instruments, channeling funds into businesses with growth potential. Despite occasional market downturns, well-managed funds continue to attract capital, highlighting investor confidence in the asset class. Kelso’s recent success underscores this trend. According to Bain & company, while 2023 saw a potential dip in fundraising, the long-term trend since 2012 shows substantial growth in private capital.

The ability of firms like Kelso to consistently deliver returns and foster growth in their portfolio companies ensures the continued importance of private equity in the overall investment landscape.

Frequently Asked questions About Private equity Funds

1. What is a private equity fund?

   A private equity fund is an investment vehicle that pools capital from various investors to invest in private companies or acquire public companies, frequently enough with the goal of improving their operations and increasing their value.

2. how do private equity firms generate returns?

   Private equity firms generate returns by improving the performance of their portfolio companies through operational enhancements, strategic initiatives, and financial restructuring, ultimately selling the companies for a profit.

3. What is a GP commitment in a private equity fund?

   A GP commitment refers to the amount of capital that the general partners (the managers of the fund) invest in the fund themselves, aligning their interests with those of the other investors.

4. What factors contribute to a successful private equity fundraise?

   Key factors include a strong track record, a clear investment strategy, a high level of commitment from the general partners, and positive relationships with investors.

5. Why is the middle-market attractive for private equity investment?

   The middle-market offers unique opportunities for private equity firms to drive growth and create value through operational improvements, strategic acquisitions, and enhanced management practices.

Share your thoughts and questions in the comments below!

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Fund Details and Investment Focus

Kelso & Company, a leading private equity firm specializing in mid-market buyouts, recently announced the triumphant closing of its latest fund, Kelso Investment Associates XIII, L.P., with $3.25 billion in commitments. This ample capital raise underscores continued investor confidence in Kelso’s ability to generate strong returns in the private equity space. The fund will primarily focus on investments in North American companies, targeting businesses with enterprise values between $100 million and $750 million. This positions Kelso firmly within the competitive mid-market private equity segment.

Unlike some growth equity firms, Kelso’s strategy centers on operational improvements and strategic repositioning within established businesses. They aren’t typically focused on high-growth, venture-backed companies. Instead, they seek to acquire companies with solid fundamentals that can benefit from their operational expertise and a focused buyout strategy.

Target Sectors & Industry Preferences

Kelso has historically demonstrated a preference for specific industries. The new fund is expected to continue this trend,with a strong emphasis on:

• Business Services: including specialized outsourcing,facility services,and industrial services.
• Healthcare Services: Focusing on subsectors like healthcare IT, specialized physician practices, and outsourced healthcare services.
• Industrial Manufacturing: Targeting niche manufacturers with strong market positions and recurring revenue streams.
• Consumer Products & services: Specifically, those with defensible brands and opportunities for operational betterment.
• financial Services: Including insurance brokerage and specialty finance.

This sector focus allows Kelso to leverage its deep industry knowledge and network to identify attractive investment opportunities and drive value creation within its portfolio companies.

Fund Performance & Limited Partner Base

While specific performance data for individual funds is often confidential, Kelso & Company has a long track record of successful private equity investments. Previous funds have generated competitive returns for their limited partners (LPs), wich include pension funds, endowments, sovereign wealth funds, and family offices. The strong LP support demonstrated in the closing of Fund XIII is a testament to this history.

The fund attracted a diverse group of LPs, both existing and new, indicating continued demand for exposure to the mid-market buyout asset class.The ability to secure commitments of this size in the current economic climate highlights Kelso’s reputation and the perceived attractiveness of its investment thesis.

Key Fund Statistics

Statistic	Value
Fund Name	Kelso Investment Associates XIII,L.P.
Total Commitments	$3.25 Billion
Target Enterprise Value	$100M – $750M
Investment Strategy	Mid-Market Buyouts, Operational Improvement
Geographic Focus	North America

implications for the Mid-Market Private Equity Landscape

Kelso’s $3.25 billion fund closing contributes to the ongoing trend of robust capital deployment in the mid-market. This increased capital availability is expected to drive up valuations for attractive targets, intensifying competition among private equity buyers. Companies in Kelso’s target sectors can anticipate increased M&A activity as firms like Kelso actively seek to deploy capital.

The fund’s focus on operational improvements also signals a continued emphasis on value creation through active ownership. This contrasts with strategies that rely solely on financial engineering or multiple expansion. Kelso’s approach often involves implementing best practices, streamlining operations, and investing in growth initiatives to enhance the long-term value of its portfolio companies.

Recent Transactions & Comparable Deals

While specific upcoming deals are not publicly disclosed, Kelso’s past transactions provide insight into their investment style. recent investments include a notable stake in Crane Currency, a leading provider of secure paper and security features for banknotes. This deal exemplifies Kelso’s preference for established businesses with strong market positions. Comparable buyout transactions in the mid-market include those led by firms like Audax Private Equity and Genstar Capital, both of which also focus on operational value creation.

Practical Considerations for Business owners

For business owners considering a potential sale to a private equity firm like kelso, planning is key. This includes:

1. Financial Due Diligence: Ensuring accurate and readily available financial statements.
2. Operational Readiness: Identifying and addressing any operational weaknesses.
3. Management Team: Having a strong and capable management team in place.
4. Clear Value Proposition: Articulating the company’s unique strengths and growth potential.

Engaging with experienced M&A advisors can also be invaluable in navigating the complexities of a sale process and maximizing value.Understanding the nuances of leveraged buyouts and the expectations of private equity investors is crucial for a successful outcome.