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Gores fund is looking to close smaller deals

Private equity firm sees an underserved market amid mega-buyouts.

June 28, 2007|Joseph Menn | Times Staff Writer

You know private equity firms are getting big when writing a check for $250 million is considered a medium-size deal.

But now that the largest buyout firms are raising $10 billion or so per fund, that's the way Los Angeles billionaire investor Alec Gores sees things.

Gores' second fund with outside investors, Gores Capital Partners II, said Wednesday that it had closed to new money after raising $1.3 billion in commitments, making it one of the largest based in Southern California.

The fund plans to take control of companies, most often spending from $50 million to $150 million. Some deals will be smaller, but a few are expected to be in that medium range of $250 million or more.

Gores and his executives at Gores Group see an opening with Kohlberg Kravis Roberts & Co., Blackstone Group and other giants focused on spending massive chunks.

"There's a void that's been in the under-$500-million check size," a vacuum that the new Gores fund intends to fill, said Senior Managing Director Scott Honour.

All those figures are up sharply from Gores' previous fund, which raised $400 million and averaged about $25 million per investment.

That fund reportedly more than tripled what its limited partners contributed.

Like that fund, the new one will focus on technology and communications companies, but will be open to industrial firms as well.

Gores typically looks for companies in distress or transition, redirecting them before selling them off to buyers in the same industry or occasionally offering them on the stock market.

Alec Gores and his associates personally invested $150 million in the new fund, Honour said.


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