Fisher Lynch Nears Co-Invest Fund’s Target

Firm: Fisher Lynch Capital

Fund: Fisher Lynch Co-Investment Partnership II LP

Target: $1.055 billion

Amount Raised: $1 billion

Fisher Lynch Capital, a manager of funds of funds and co-investment vehicles, has all-but hit the $1.055 billion target of its second fund that will make direct investments in target companies alongside LBO and growth-equity firms.

The firm is managing the new vehicle, Fisher Lynch Co-Investment Partnership II LP, on behalf of its two limited partners, the Oregon Public Employees Retirement Fund and the Washington State Investment Board. Each LP had previously pledged up to $500 million to the fund, and a regulatory filing with the Securities and Exchange Commission notes that the vehicle had raised $1 billion from two investors, as of May 10.

It is unknown where the additional $55 million will come from—be it an investment from the general partner or a third-party. An executive from Fisher Lynch Capital declined to comment via email, deferring only to what was listed in the regulatory filing.

Co-investment and other direct investment programs are growing in popularity among LPs as they look for ways to bypass the management and deal fees associated with traditional fund structures. A co-investment vehicle such as Fisher Lynch Capital’s gives its LPs exposure to deals sourced by a diverse range of firms for the price of a single management fee.

During Fund II’s investment period, Fisher Lynch Capital will collect a management fee based on a percentage of the vehicle’s total commitments. Once the three- to five-year investment period closes, the management fee will be based on a percentage of the fund’s invested capital, according to the regulatory filing and meeting minutes from the Washington Sate Investment Board.

Fisher Lynch Capital’s co-investment strategy calls for investments that range from $10 million to $100 million each. Executives that run the strategy typically focus on LBOs and growth capital deals sourced by the general partners of either Oregon or Washington State, but they are also free to participate in venture capital, mezzanine and distressed deals, according to the firm’s Web site.

Capital from the firm’s first co-investment fund, which closed on $500 million in 2006, was also split 50/50 between Washington State and Oregon. Deals from that fund included a co-investment in Education Management Corp., a for-profit education provider that was acquired for $3.4 billion in a June 2006 deal led by Providence Equity Partners and Goldman Sachs Capital Partners.