Erin Griffith

Over the holidays, Dallas-based turnaround shop Prophet Equity held a final close on its debut fund with $250 million in commitments, after 17 months on the road. The effort was oversubscribed, in part, because Prophet stuck militantly to its hard cap figure. Since Prophet will continue to target the same size investments, the firm already has pledged not to increase the size of future funds, either. In addition to the $250 million in capital commitments, the firm’s GPs have committed $25 million to the effort, with the option to raise their commitments to $50 million. I spoke with the firm’s founder, Ross Gatlin, about raising a first-time fund in this market. Gatlin is an alum of Insight Equity, a Texas turnaround shop has also been raising a new fund.

From last week's Buyouts South conference in Boca Raton, Florida: "You can tell how bad the fundraising market is by looking at the number of ties in this room. When’s the last time you came to a conference in Boca Raton, Florida and saw this many people in suits?” -Christopher Stringer, a managing director with Private Advisors, where he is responsible for private equity manager research, due diligence, selection and monitoring. Stringer was, incidentally, not wearing a tie.

On a fundraising panel at Buyouts South last week, David Turner, head of Guardian Life Insurance Company of America’s private equity investment practice, commented on what makes or breaks a meeting with general partners. Moderator: What is the most important thing you want to see in an LP meeting? DT: Number one, I care about the culture of the firm. I want to see the character and integrity of the individuals running the firm. It needs to be someone I can see myself being a partner with for ten years. That’s in addition to the inherent capabilities and background that shows you can walk the walk. Which is number two: the GP needs to get granular on deals within the first ten minutes of the meeting. I need to know things like why you chose the companies you chose, and whether you know how to structure a deal properly.

Earlier this year, Sun Capital became one of a small handful of buyout funds that agreed to reduce its fund size. The firm allowed LPs to decrease their commitments to its $6 billion fifth fund, slicing off $1 billion. That news was welcome to investors and a breath of fresh air to those that felt […]

Here's a look at the last week's worth of scoops, data, and analysis from the peHUB team. Catch up on what you missed before it goes behind our paywall... All First Reads | All Second Opinions PE Debt Watch (Upgrades and Downgrades) Q&A with TrialPay CEO Alex Rampell: "We could have had a lot more revenue if we'd done more in this sleazy market" Deal Scoop: Vistaprint Buys Threadsmith.com Founder Spotlight: Siqi Chen of Serious Business Fundraising Updates: vSpring, Weathergage, Golub Capital... KKR's Navab: Media Opportunities Abound A Lost Generation of Entrepreneurs? Papa Murphy's Auction Heating Up M&A Marke Erik Hirsch: "GPs Are Essentially Service Providers" Broadcom's Henry Nicholas is Having a Very Good Day (Finally) Pet PR Peeve: Don't Call It "Rumors or Speculation" Screw the Superbowl; Go Skiing M&A Monday (On a Tuesday) Vestar Capital Leaves Japan The Case for Private Equity Registration NY State Common to Emerging Managers: "We Have a Placement Agent Workaround" Energy Efficiency Prediction For 2010 Already Coming True Behold: Apple's iPad, the New Newton Leon Black Supports Change To Carried Interest Tax Is Carl Icahn Feeling Better About Motricity? And About His Son? Quote of the Day: Secondary "Line in the Sand" Rising "Clouds" Within The VC Downturn Yelp Helps Kill the IPO Market VC Adam Dell, Not Too Busy For Padma Lakshmi? Tagg Romney's New Firm To Close Fund Above Target in Coming Weeks

Physical Toll: Hank Paulson's Valley of the Dolls Moment (Daily Intel) Tweet of the Day: "Rich Bressler of THL was refreshingly candid about perhaps paying too much for ClearChannel." (Twitter) More Davos: PE deals are picking up, says CD&R's Gogel. (BusinessWeek) The Challenges of Time for Start-Ups: In the world of start-ups, capital efficiency is a factor in determining how much entrepreneurs and investors realize on their invested time and capital. (Dealbook) Wow: It's a day of bold calls all around. First Bain and KKR executive an egregious dividend recap on HCA, then IDD names Goldman Sachs its bank of the year? Really? I mean, its possible that there were no other less reviled yet profitable candidates, though I can think of a few (JPMorgan perhaps? Deutche Bank? HDBC maybe? UBS?)... Maybe this tone-deaf choice had something to do with the fact that Blankfien actually agreed to do an interview with the publication... (IDD) World of Connections: A special report on social networking. (Economist via Abnormal Returns)

Given the expectations that hospital operator HCA would file an S-1 to go public any day now, it’s a surprising development that PE owners KKR, Bain Capital and Merril Lynch Private Equity today took a $1.75 billion dividend on the company. Why add leverage to a company before shopping it to the public market?  KKR […]

As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies from ratings agencies Standard & Poor’s Ratings Services and Moody’s Investors Service. This week is apparently companies owned by Apollo, Warburg Pincus, JLL Partners, Arcapita and Kelso & Co. received ratings changes. Apollo saw the most action, with three companies on the list. Jacuzzi Brands was upgraded after a recap/distressed debt exchange, Noranda Aluminum Holding Corporation received an upgrade on improved performance, and Hexion’s outlook was changed from negative to stable, thanks to a debt restructuring.

He predicted he’d be misquoted and taken out of context, so I will try not to do that here. Very simply, Eric Hirsch, Chief Investment Officer of Hamilton Lane, believes that limited partners should not view private equity pros as partners. GPs, he said, provide a service to LPs, and should act accordingly. Speaking in a keynote interview at Buyouts South in Boca Raton, Hirsch noted his comment might get him in trouble with some GPs, but nevertheless made the argument against the idea of a “parternship.” That phrase twists the real meaning of an LP-GP relationship, he said. “The word “partner” makes it seem like an LP needs to support a GP even when things go awry, because they are partners,” he said. When in reality, investors have hired general partners to generate superior returns over a 10-year period and the relationship should be viewed as such.

Whaa? PE Firms may actually benefit from the Wall Street restructuring plan. (FT Lex) Pot Calling Kettle Black? Public pension funds needing to boost their returns but frustrated with hedge funds and private-equity investments are turning to one of the oldest investment strategies-using leverage! (WSJ) Speaking of Pensions: Yesterday I outlined how NY State Common plans to support emerging manager funds without placement agents. From that same presentation, NY Post reports on the firm's "rationalization" of its exposure to mega-funds. (NY Post) Contradictions: The first Indian-American woman to run for Congress is a hedge fund lawyer, and she's a Democrat running with a pro-Wall Street mantra. (NY Times) Reports from Davos I: Felix Salmon is siding with the pessimists. (Reuters)