They debuted last year’s largest new fund, and their investor list is a veritable who’s who of digital media investing. But SEC filings on Raine Group’s fund closings reveal that the private equity firm, launched by two well-connected investment bankers, could be losing steam.
The fund, Raine Partners I LP, held an exciting first close on $303 million from 22 investors on September 24, 2010. For a brand new fund in an ice-cold fundraising climate, managed by professionals with no proven track record—founders Joe Ravitch and Jeff Sine brokered several storied media mergers, but have not worked as general partners in a fund—the blockbuster first close seemed to defy the odds. Raine Group’s pool of big name investors and advisors lent a stamp of approval: They received money from Tom Freston, former head of Viacom; marketing conglomerate WPP, Ari Emanuel and his firm William Morris Endeavor talent agency; and Ted Forstmann, IMG owner. Abu Dhabi’s Mubadala Development Co. took a 9% stake in the merchant bank; its not clear if the emirate invested in Raine Partners I LP as well.
And this week a report from the Financial Times added several more to that roster: Eric Schmidt, former CEO of Google; notorious Napster co-founder and former Facebook president Sean Parker; Peter Chernin, former COO of News Corp.; one-time Yahoo CEO and Hollywood executive Terry Semel; Samsung founders Jay and Miky Lee; Masayoshi Son of Softbank; Demand Media founder Richard Rosenblatt; and Marc Andreessen, the Netscape co-founder and partner in Andreessen-Horowitz.
Yet Raine Group may have exhausted its universe of rich friends. A Form D filed with the SEC on March 17 reveals the firm has only collected an additional $33 million from eight investors in the past six months. It’s not exactly a breakneck pace toward the fund’s reported $500 million target: at that rate, the target wouldn’t be met for another two and a half years.
To be fair, the slowdown in funds raised could be attributed to the firm’s recent deal activity. Last week Raine Group invested, alongside its own investors WPP and Tom Freston, in Vice Media. The company also secured investments in Jagex, a game developer, and OpenSky, a social shopping company, the FT reported. But if Raine Group can’t win over traditional institutional investors, that last chunk of capital may be slow going.