04/14/2010

LPs Get Look at Post-Greenhill Offering

Buyout shop Greenhill Capital is launching its first fund-raising campaign since beginning its separation from Greenhill & Co.

The New York operation is expected to set an equity target of $700 million for the vehicle, Greenhill Capital Partners 3. It is currently holding preliminary talks with existing investors, and will likely start a formal marketing effort in the next week or two.

Led by Robert H. Niehaus and V. Frank Pottow, Greenhill Capital staged a management buyout in December that gave it the rights to set up future funds on the strength of its prior track record. The group - eventually to be known as GCP Capital - also agreed to continue managing three funds that remain under Greenhill & Co.'s control: the two prior Greenhill Capital Partners vehicles and a Europe-focused pool.

Greenhill & Co., meanwhile, is focusing more heavily on its work as an advisor.

Greenhill Capital invests mainly in mid-size companies in the U.S., with an emphasis on energy and financial-services businesses. It typically uses little leverage, which backers might find appealing as ongoing credit-crisis pressures make it difficult for more debt-reliant firms to carry out their deals.

Limited partners might also be comforted by the fact that Greenhill Capital, like many firms, is adjusting to a weaker market by resisting the temptation to raise more than it did last time around. The shop finished marketing Greenhill Capital Partners 2 in 2005 with $875 million, beating that vehicle's $700 million equity target.

The new campaign comes about four months after Greenhill & Co.'s venture capital arm, Greenhill SAVP, started marketing its third fund. That operation, which is also breaking off from the parent company, is seeking $150 million to $200 million.

Overall, Greenhill & Co.'s buyout and venture capital vehicles encompassed $1.7 billion of committed capital when the company first said in October that it would shed those businesses. Both Greenhill Capital and Greenhill SAVP are expected to receive some backing from the shop, whose placement-agent team appears to be handling marketing duties for both operations.