One Rock Capital Partners, an investor in complex deals involving mid-market businesses, returned to the market with a fourth flagship buyout offering.
One Rock Capital Partners IV is seeking $3.25 billion, according to a report prepared for Connecticut Retirement Plans and Trust Funds. The New York private equity firm set the cap at $4 billion.
A first closing was expected in February, the report said, with a second slated for April.
The target marks a significant step-up from One Rock’s prior flagship. If Fund IV succeeds in raising $3.25 billion, it will be 62 percent larger than its predecessor, closed in 2021 at $2 billion. If it reaches the hardcap, it will be twice the size of Fund III.
Fundraising challenges are expected to persist or worsen in 2023, at least in the year’s early months. A key factor is overstretched LPs, who are taking more time to confirm commitments and are showing more resistance to accelerated capital raising that includes bigger tickets.
One Rock’s target bump may be linked to plans to expand its geographic coverage.
Last month, the firm announced the opening of an office in London to help it pursue European opportunities. The initiative builds on initial investments in region, among them Prefere Resins, a German manufacturer of adhesive resins and formulations acquired in 2022.
One result of this push into Europe would be to give the strategy a more transatlantic flavor.
In the past, One Rock has made control investments in complex deals, such as carve-outs and under-optimized situations, involving mostly US companies. The latter operate in four sectors: chemicals and process industries, specialty manufacturing and healthcare products, food and beverage manufacturing and distribution, and business and environmental services.
Fund IV, expected to make eight to 12 investments of $200 million to $450 million, the Connecticut report said, would be the vehicle for the transatlantic move. US opportunities will likely account for 80 percent of capital, and European opportunities, 20 percent.
Strategy growth
Along with expanding its geographic coverage, One Rock is adding to its family of funds. Together with the launch of the latest flagship, it unveiled One Rock Emerald Fund, which has a $650 million target and $1 billion hardcap.
The Emerald fund appears to be a response to One Rock’s up-market shift, which has inhibited the pursuit of attractive smaller opportunities.
As such, the vehicle will function as the lower-mid-market complement to the flagship strategy. While Fund IV will focus on companies with EBITDA of $40 million-plus, the Emerald fund will zero-in on those with EBITBA of less than $40 million, the Connecticut report said.
Like Fund IV, the Emerald fund is expected to make eight to 12 investments, but with smaller check sizes in the range of $50 million to $150 million.
One Rock Capital Partners III was as of September 2022 generating a 1.2x net multiple and a 23.4 percent net IRR, according to the Connecticut report. Fund II was earning a 2x net multiple and 21.1 percent net IRR, while Fund I was earning a 2.2x net multiple and a 26 percent net IRR.
One Rock was founded in 2010 by managing partners Tony Lee and Scott Spielvogel, both former Ripplewood Holdings executives. The event was backed by Japanese general trading business Mitsubishi Corp, which remains a source of global strategic support.
The firm did not respond to a request for comment on this story.
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