Avista Capital Makes Major Change to Fund Strategy

December 2, 2015, 5:27 PM UTC
Photograph by Getty Images

Avista Capital Partners, a New York-based private equity firm formed a decade ago by former DLJ Merchant Banking chief Thompson Dean, is making a major change to its structure, according to multiple sources close to the situation.

When Avista begins raising its fourth fund in early 2016, it will not include an energy investing component. Instead, Avista’s energy team will attempt to raise their own fund under the firm’s banner.

The official explanation to prospective investors is that the move will provide greater investment flexibility, as certain limited partners may be averse (or already overexposed) to the energy sector. More to the point, however, is that energy deals out of Avista’s $1.4 billion third fund have dragged down overall returns. By carving out those deals from their track record, it gives Avista’s non-energy folks a better chance of finding willing investors.

No word yet on how much Avista plans to raise. Don’t be surprised to see a fairly low number, given that it has fallen short of target the past two times around.

The firm currently has enough dry powder in its existing fund to do one new deal, or perhaps two if they are small.

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