CHEVY CHASE, MD-Federal Capital Partners has closed on Fund II, a $529.2-million capital pool that the firm will use to make its trademark value-add investments in the Mid-Atlantic region. FCP’s original expectation was that it would raise about $500 million. However, strong investor demand pushed it to be oversubscribed.

The vast majority of Fund II investors have invested with FCP before, Esko Korhonen, FCP managing partner, tells GlobeSt.com. "Many of these companies increased their investments this time," he notes. "In addition, we had new companies--institutional investors representing pension and endowment funds--participate as well." The fund, when fully invested, is expected to have $1.5 billion in purchasing power, depending on leverage, which Korhonen estimates to be between 65% and 70%.

He is not worried about sourcing opportunities—a problem for some funds, especially those raised in the depth of the recession with an eye on opportunistic buys. Fund II has already closed 14 investments using $103 million in its equity, for a value of $367 million. "We're comfortable with the number we have, plus we've had a great head start, so we feel very good about our pace," Korhonen says. In addition, he adds, FCP has, over the course of the last two to two-and-a-half years, doubled in size. "We have added some great people in acquisitions, asset management, accounting and control to help us manage our portfolio and increase our capacity on the acquisition side."

Fund II will follow FCP's favored strategy of value add investments in the Mid-Atlantic, which the company defines as reaching from Pennsylvania to South Carolina. It has invested mostly in the DC area, Korhonen says, "but we're looking in other markets within our footprint." Federal Capital Partners launched the then-$500 million equity fund in March of 2011, according to paperwork filed with the Securities and Exchange Commission.  The firm’s first fund, FCP Fund 1, is a $230-million private equity fund that FCP closed in October 2008.