Diamond Castle Holdings LLC, the private-equity firm started by a group of executives from Credit Suisse Group AG (CS:US), is seeking ways to let clients opt out of its last fund raised in 2006, three people with knowledge of the matter said.
The firm is working to help investors in Diamond Castle Partners IV LP, a $1.8 billion fund, sell stakes on the secondary market, according to the people, who asked not to be identified because the information is private. The structure is being worked out and could involve buyers providing fresh capital to New York-based Diamond Castle.
Private-equity firms are pursuing ways to offer clients liquidity after the 2007-2009 financial crisis delayed company sales and made it more difficult for some funds to return client money within the normal lifespan of a pool, typically 10 years. Corporate Partners LLC, a former unit of Lazard Ltd., is said to be considering giving clients the option to leave its 2005 vehicle. Goldman Sachs Group Inc. and the Canada Pension Plan Investment Board may invest in the holdings from a 2002 fund managed by J.W. Childs Associates LP.
Ari Benacerraf, co-founder of Diamond Castle, didn’t return a phone call and e-mailed request for comment.
Diamond Castle, which has deployed most of the fund, hasn’t sought to raise a successor. Fund IV, which started investing in 2005, was producing a 1.7 percent internal rate of return and a multiple of 1.1 times invested capital as of Sept. 30, according to data from Oregon Public Employees Retirement Fund. The fund was about 95 percent invested.
A 2010 departure triggered a key-man event at Diamond Castle, as founder and Chief Executive Officer Lawrence Schloss left to become the chief investment officer at New York City’s pension funds. Schloss, 59, is now president of investment firm Angelo Gordon & Co.
Diamond Castle was founded in 2004 by executives from DLJ Merchant Banking Partners, a former private-equity business of Zurich-based Credit Suisse. The senior managing directors, Benacerraf, Michael Ranger and Andrew Rush, also helped found the firm.
Diamond Castle typically invests $50 million to $200 million in U.S. and Canadian companies, according to the firm’s website. The firm targets energy, financial-services and health-care companies. The firm’s website lists nine current investments including KDC Solar LLC, which develops energy projects for commercial and industrial real estate owners; Multi-Color Corp., a label provider for consumer and health-care products; and EverBank Financial Corp.
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