Portfolio Advisors holds final close on Fund III

Darien, Connecticut-based Portfolio Advisors held a final close on its third fund of funds, capturing $661 million (€562 million) in limited partner commitments for Portfolio Advisors Private Equity Fund III.

The firm has been shopping the fund for nearly a year, and held a first close of $150 million in 2004 and a second close on $511 million earlier this year. Portfolio Advisors’ latest fund is much larger than its previous vehicle, a 2002-vintage fund, which had $179 million in LP commitments.

Paul Crotty, managing director, Portfolio Advisors

According to Paul Crotty, a managing director at the firm, the new fund is modelled after Portfolio Advisors’ previous efforts, and allowed investors to set its own allocation across the alternative asset spectrum. Investors could specify what proportion of their commitment went to either buyouts, venture capital, special situations or real estate.

“We think this provides a structural advantage for our limited partners,” Crotty told PEO. “They get to make a choice in their strategy, but they only have to do it in one vehicle. It’s all customised at the LP level and provides them with total flexibility.”

Investors in the fund, according to SEC documents, include Snap-on Tools Collective Investment Trust, Pennsylvania Medical Society Endowment Fund, Iowa West Foundation, Archdiocesan Pension Plan and Okabena Partnership J.

The one difference from past fund of funds is that this latest vehicle represents Portfolio Advisors’ introduction into real estate, which Crotty said was added due to a demand seen from certain limited partners.

As the fund currently stands, roughly two thirds of the capital will be dedicated toward buyouts and venture capital, split down the middle, while 27 percent will go to distressed situation and mezzanine funds and eight percent is set aside for real estate.

Crotty would not disclose any of the investments the fund has made, but Portfolio Advisors has, in the past, placed capital with such groups as Battery Ventures, TA Associates, Oak Investment Partners, Trinity Ventures, Century Park Capital Partners, Behrman Capital, Bay Partners and Escalate Capital.

The fund is already 70 percent committed, and Crotty anticipates raising a successor vehicle sometime next year.

Fortress Group served as placement agent for the fundraising.