Fisher Lynch wants to expand LP base in fresh co-investment fund targeting $500m

The manager looks to expand its LP base beyond Washington State Investment Board.

Fisher Lynch Capital is seeking $500 million for its fifth co-investment fund as it looks to expand its LP base beyond Washington State Investment Board, which has long been its primary investor.

Co-investments have become much coveted by investors as a way to boost returns by reducing fees and expenses. The growth of co-investments could serve as Fisher Lynch’s impetus for its desire to recruit new investors.

Washington State Investment Board’s private markets committee approved a $100 million commitment to Fisher Lynch Co-Investment Partnership V, which has a $500 million target. Buyouts watched a broadcast of the meeting, which was held on November 2.

According to assistant senior investment officer Aaron Daley, the $152.3 billion system has invested $5 billion with Fisher Lynch co-investment funds since 2006 and has been the only LP in most of their offerings.

Most notably, the system committed $2 billion to Fisher Lynch’s Evergreen Park Investment Fund in 2021.

Daley said one reason behind Washington State’s $100 million commitment was to entice other LPs to Fund V, calling it a “companion vehicle” alongside the system’s other Fisher Lynch investments.

“The point is to bring in other investors. We want to make a large enough commitment as a primary partner for other LPs to feel confident since we have skin in the game,” Daley said.

According to Daley, Fisher Lynch’s funds make co-investments alongside GPs that Washington already invests with.

Fund V has a GP commitment of 2.5 percent, according to Marshall Bartlett, a managing director at Fisher Lynch.

Fisher Lynch managing director Leon Kuan said that more than 85 percent of the firm’s co-investments came alongside funds that were in the top two quartiles in terms of performance.

Brett Fisher, the manager’s founder, touted a successful co-investment alongside GTCR of broadband specialist Zayo Communications in 2012 as an example of the firm’s prowess.

“Our direct investments provide insights into different funds and help us understand sponsors,” said Kuan.

Tom Cawkwell, head of private markets for the system’s consultant Albourne, said the partnership with Fisher Lynch has helped Washington State gain interest from managers bringing new funds to the market.

“Other LPs do not get funds calling back as quickly as you do. You and Fisher Lynch are one of their first calls, and that is a great position to be in,” said Cawkwell.

According to Buyouts’ database, Fisher Lynch’s third co-investment fund, which closed in 2016, has a net IRR of 14.29 percent. Washington State has paid in more than $700 million into Fund III with $383.5 million returned, with $851 million in remaining value.

Fund IV, which closed in 2019, has earned an 18 percent net IRR, according to Buyouts’ database.

Fisher Lynch did not respond to a request for comment.