Riordan Lewis & Haden, the buyout firm led by Los Angeles luminaries, has closed on its second institutional fund, a $265 million pool.
Three banks top the list of limited partner investors: City National Bank, Union Bank of California and Wells Fargo. Other LPs, reflecting a decidedly California preference, include the Los Angeles County Employees Retirement Association, Pacific Mutual Life, Sun American, the Retirement and Pension System of Maryland, and the California Public Employees’ Retirement System, by way of investment advisor Hamilton Lane.
The 25-year old firm was co-founded by Richard Riordan, who served as mayor of Los Angeles from 1993 to 2001, and Christopher Lewis, a former tennis collegiate tennis champion at the University of Southern California. Riordan, who ran for governor of California unsuccessfully in 2002, has since handed control to Lewis and Pat Haden, a lawyer who played quarterback for the USC football team when it won two national championships in the mid-1970s.
For the first two decades, the firm relied only on Riordan’s personal wealth for investments, disbursing a large percentage of the gains into Riordan’s philanthropic ventures. In the late 1990s, however, the firm missed out on an LBO opportunity for lack of funds, spurring the partners to raise their first institutional fund. The firm boasts having achieved a historical IRR of nearly 30%, according to Lewis.
The firm had initially set a target of $250 million for RLH Investors II LP, but oversubscription helped push fund-raising past the goal. The first fund, closed in 2000, held $120 million in commitments. This newest fund will most likely allow for 10 to 15 deals.
Riordan Lewis & Haden targets companies in California and the western United States with revenue between $20 million and $250 million. The firm has invested in business services, health care, distribution, niche manufacturing and financial services. About half of the firm’s investments have been for minority stakes. —Jeremy Harrel and Mark Cecil