By Laura Kreutzer and Daniel Hausmann
Of DOW JONES LBO WIRE
The clock is ticking for Elevation Partners LLC's debut fund,
but the media and entertainment buyout firm is hoping for a
reprieve.
Elevation, a high-profile firm co-founded by Roger McNamee and
U2's Bono, among others, has asked its backers for a one-year
extension on the investment period of Elevation Partners LP, a $1.9
billion debut fund raised in 2005, LBO Wire has learned.
The debut fund's investment period ends this August, but the
Menlo Park,Calif., firm still has about $200 million in capital to
deploy, several of Elevation's investors said.
At press time, Managing Director Kevin Albert, Elevation's head
of investor relations, couldn't be reached for comment.
The firm wants its limited partners to sign off on the extension
by mid-July and has proposed some concessions on management fees in
exchange for the additional time, these LPs said. They wouldn't
provide specifics on the proposed concessions.
Backers of the fund include Colorado Public Employees'
Retirement Association, Indiana State Teachers' Retirement Fund,
Oregon State Treasury, South Dakota Investment Council, Teachers'
Retirement System of the State of Illinois and Washington State
Investment Board.
Two LPs would not discuss whether they favored an extension. A
third backer said he believes the firm will be able to garner the
support needed. Another person said the fund's LP advisory board
supports the extension.
The extension is expected to push out fund-raising plans for
Elevation's next offering, one LP said. The debut fund's current
performance would likely make raising a new fund a tough slog at
the moment.
As of March 31, 2010, the fund was producing a negative 10% net
internal rate of return, according to performance data from Oregon
State Treasury. However, that figure doesn't include results from
the sale of Palm Inc. (PALM), in which Elevation had about a 30%
stake.
The sale of Palm to Hewlett-Packard Co. (HPQ) stands to bring
Elevation less than $30 million in profits, hardly a home run but
not the massive loss that some industry observers had
predicted.
Other companies in the firm's debut fund include Forbes Media
LLC, publisher of Forbes magazine; market analytics firm
MarketShare Partners; and online review site Yelp. Elevation also
holds a 1% stake in social networking company Facebook that it
purchased on the secondary market in November 2009.
Elevation has also laid off fewer than 10 staffers, largely in
back-office administrative support roles, a person familiar with
the firm confirmed. News of the layoffs was previously reported by
Fortune.
The layoffs are largely related to the exit of Palm. The firm
had committed a half dozen people, including senior partners, to
the restructuring effort at Palm, this person said. Additionally,
Principal Patty Wexler, with Elevation since it started in 2005,
has decided to leave the firm, according to the person.
Elevation has also added two added two senior level investors,
managing directors Avadis "Avie" Tevanian and Rajiv Dutta, in
recent months.
(Dow Jones LBO Wire covers news about private equity.)
-By Laura Kreutzer and Daniel Hausmann; Dow Jones LBO Wire;
laura.kreutzer@dowjones.com
