Move.com

Could a new fund lift Elevation Partners?

December 16, 2009: 6:00 AM ET

High profile private equity shop appears to be chatting up a new fund despite string of struggling investments.

Word is that Elevation Partners, the high-profile if poorly timed private-equity firm headlined by rock star Bono and star investor Roger McNamee, is considering raising a new fund.

Elevation's investment partners (from left): Bret Pearlman, Fred Anderson, Bono, Marc Bodnick and Roger McNamee. Photo: Elevation Partners.

As surely as dogs chase rabbits or night follows day, PE shops raise more money when the existing fund is mostly used up. (Elevation's is about 70% invested.) Yet when all you have to show for your first effort are embarrassing misses -- no rabbits caught, mostly grim darkness, metaphorically speaking -- it's got to be tough to collect fresh cash.

This is the tough position in which Elevation finds itself. Despite having raised $1.9 billion in 2004, the ballyhooed firm is far from a successful experiment. It's got all of one exit, a gaming-company sale to Electronic Arts (ERTS), headed by an Elevation co-founder.

Two of its investments are seriously sick. One is the online real estate dog Move.com (MOVE), better known by its scandal-ridden former name, Homestore.com. The other is Forbes Media, the parent for FORTUNE competitor Forbes Magazine, in which Elevation invested at perhaps the worst time in decades for media enterprises.

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