Burkle’s Yucaipa Said to Hold Preferred Equity Talks With Coller

  • Credit Suisse said to work with firm to study options for pool
  • Coller may provide as much as $300 million for Yucaipa deals

Yucaipa Cos, the buyout firm founded by billionaire Ron Burkle, is in talks with Coller Capital to receive new money for some of its portfolio, people familiar with the matter said.

Coller has discussed providing as much as $300 million for Yucaipa to finance bolt-on investments for companies in its 2008 fund, said the people, who asked not to be identified because the information is private. Talks are preliminary and may not lead to an agreement, the people said.

Yucaipa has been working with Credit Suisse Group AG to examine options for the pool, for which it raised $2 billion in 2008, the people said. The firm’s American Alliance Fund II, which finished raising $2 billion in 2008, was generating a 9.5 percent annualized return after fees as of Dec. 31, according to data compiled by Bloomberg, placing it in the third quartile of private equity pools from that year.

Frank Quintero, a spokesman for Los Angeles-based Yucaipa, said the firm continually examines options and any agreement isn’t imminent. Representatives for Credit Suisse and London-based Coller declined to comment.

Capital secured against existing assets, known as preferred equity, is unlike a traditional secondaries deal, in which existing investors sell their stakes in a fund. A preferred structure keeps initial backers in place while the new capital provider gets a return at an agreed rate of interest when assets are sold.

A deal to provide new financing for the Yucaipa fund would involve overcoming tax implications connected to its current structure, two of the people said.

Yucaipa has completed deals valued at more than $30 billion since its founding in 1986, according to its website. Burkle, 63, made his name in the 1980s and 1990s by buying and selling West Coast supermarket chains such as Food 4 Less, Alpha Beta, Ralphs and Fred Meyer.