Like its other funds, Fidelity Partners CAP IV Fund buys troubled municipal bonds (at a discount to face value) that are collateralized by real estate. The firm then works to restructure the debt, make renovations and improve the underlying operations of the properties.
Fidelity Partners' latest fund will leverage its acquisitions up to approximately $75 million worth of real estate. Its first acquisition, which recently closed, was tax-exempt bonds collateralized by a 180-unit apartment community in Ridgeland, MS. Two other acquisitions are pending in Tennessee and Florida.
Kipling says the CAP IV fund "takes advantage of the disconnect that often occurs between bond investors and the real estate that serves as the collateral for those bonds." Keiretsu Forum member Paul Maglicco says the fund represents an opportunity to make leveraged investments in real estate "with a unique probability of earning tax exempt income."
A Keiretsu executive could not be reached Monday for comment. Keiretsu's investment in CAP IV was secured by Kipling Capital, a private equity investment company based in Mill Valley, CA. Kipling raises all of the equity for Fidelity Partners offerings and co-invests.
Keiretsu Forum's membership totals 350 accredited private equity investors. In 2004, the East Bay founding chapter of Keiretsu Forum was the most active Bay Area angel group with $17.25 million invested in 20 companies. Keiretsu Forum members make individual investment decisions.
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