KSL holds $2b final close

The Denver-based hospitality private equity firm has held a final closing on its third fund, significantly exceeding its original target.

KSL Capital Partners has held a final closing on $2 billion for its third fund specializing in travel and leisure businesses. According to the Denver-based hospitality private equity firm, the fund, KSL Capital Partners III, has exceeded its original target of $1.5 billion.

Co-founding managing director Eric Resnick said the fund formally was launched last July when the firm saw signs of new life in the hospitality sector. “The hospitality sector certainly has picked up, though it's not an easy fundraising environment,” he said, pointing out that it's still an environment where “investors are understandably cautious with whom they want to make long-term investments.”

This is the third investment vehicle that KSL has raised since its formation in 2005 and, like its previous two funds, will be used to pursue investments in the hospitality, recreation, clubs, resort real estate and travel service sectors. Investors in the third fund include public and private pensions, foundations, endowments, institutions and high-net-worth individuals and families. Probitas Partners acted as placement agent for the fund.

Although the fund will seek global opportunities in the travel and leisure sectors, it will focus primarily on investments in North America. “Fundamentals are improving in the hospitality market, and, in some cases, values have gotten ahead of fundamental growth prospects,” Resnick said. “Still, we think there are very attractive opportunities to invest.”

The final close on its third fund is yet another sign of KSL's accelerated growth. The firm, which made its debut on the PERE 30 this year at number 26, currently has in excess of $3.5 billion in equity commitments under management. The firm's previous fund closed on $1.1 billion in 2006, delivering a 1.14x multiple and a net IRR of 9.7 percent.

“This new fund will utilize the same investment principles we have used in our prior investment vehicles,” said co-founding managing director Michael Shannon in a statement. “As a sector fund specializing only in travel and leisure businesses, we take a very hands-on approach to our investments.”

The closing of the third fund follows KSL's recent acquisition of the 293-unit InterContinental Montelucia Resort & Spa in Scottsdale, Arizona, for $115 million. That investment will be part of the third fund’s portfolio.