Z Capital Partners looks to set $750M hard cap for second fund- sources

By Nicel Jane Avellana

Jan 08, 2014 08:19 PM EST

Citing two people with knowledge of the matter, PE HUB reported that Z Capital Partners has surpassed its target for its second fund and is now looking at setting a hard cap of $750 million. Z Capital Partners is a special situations fund managed by Black Diamond Capital Management Founder James Zenni.

One of the sources said fundraising for Fund II would most likely be completed in the first quarter. The fund was initially launched in December 2012 with a target of $500 million. The person added that a first close of the fund was held in January last year when it had already raised over $600 million.

The fundraising was described by one of the people as having demand that exceeded the cap but it remains unclear if Z Capital Partners still has plans of increasing the cap on the fund.

One of the sources said Z Capital has already utilized an estimated $135 million from the second fund. The company looks for investments in middle-market companies that need financial restructuring or have to be turned around. A lot of these firms are supported by private equity companies.

The most recent acquisition of Z Capital Partners is MSD Performance, a racing auto-parts manufacturer, which it had helped out of bankruptcy. In September, MSD filed for bankruptcy. In 2005, ValueAct Capital and management bought MSD from Gryphon Investors which bought the company in 2004.

Information from its website said that Z Capital which has offices in Illinois and New York has regulatory assets and committed capital under management amounting to $1.5 billion. It has opportunistic and value-oriented approach to private equity has been applied by its principals for more than seventeen years. The private equity firm says it deploys capital "across the balance sheet of industry leading businesses" and seeks to give value to their investors throughout economic cycles.

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