Italy’s Clessidra Said to Cut Fund Size by $406 Million

Clessidra SGR SpA, Italy’s largest private-equity firm, agreed to cut the size of its latest fund by about 20 percent earlier this year, according to two people with knowledge of the matter.

Clessidra, based in Milan, shrank the pool by about 300 million euros ($406 million) to 1.1 billion euros following discussions with investors, said the people who asked not to be identified because they weren’t authorized to speak publicly.

The decision to cut the fund was made amid concern that Clessidra, which owns stakes in companies such as cake maker Balconi SpA, wouldn’t be able to spend capital remaining in the pool before the period it has to deploy the money expires in the fourth quarter of 2014, said one of the people.

Private-equity firms typically pool money from pension plans and endowments for a 10-year period with companies bought within the first five years and sold over the second five. They keep about 20 percent of the profit from investments and, in Clessidra’s case, charge investors an annual management fee equivalent to about 1.5 percent of the fund.

The reduction would result in Clessidra forgoing about 4.5 million euros a year in management fees. The company now has about 150 million euros left to spend from the fund, which was raised in 2009, one person said.

Clessidra is in the early stages of raising its third fund, which it plans to market next year with a 1 billion-euro target. About 40 percent of the company’s investors are Italian institutions with the rest from overseas, one of the people said. Officials at the firm declined to comment.

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