Freeman Spogli holds first close on Fund VII with Kansas and NM on board

Kansas Public Employees’ Retirement System committed up to $50 million to the new fund, while the New Mexico State Investment Council approved a $75 million commitment. 

Freeman Spogli expected to hold a first closing on about $650 million last month, according to minutes of the March 25 meeting of the New Mexico State Investment Council. Buyouts was unable to reach executives at Freeman Spogli for comment. A spokesperson for the council confirmed that the fund held a first close on April 30 but gave no further details.

Freeman Spogli does not have a formal cap for the fund but it nevertheless is expected to raise no more than $1 billion to $1.25 billion, according to the minutes. The general partner plans to commit $100 million to the fund.

Predecessor FS Equity Partners VI LP closed in 2011 at $735 million and, according to the minutes, that fund “is expected to complete one additional $50 million to $100 million investment in the near term and will reserve the remainder of the fund for opportunistic add-on acquisitions to existing portfolio companies.”

Freeman Spogli was founded in 1983 by Bradford Freeman and Ronald Spogli. With more than 25 employees working out of offices in Los Angeles and New York, the firm has invested more than $3.3 billion in some 50 companies over its three decades, according to its website.

The firm acquires North American businesses generating EBITDA of $10 million to $50 million in transactions of $100 million to $500 million. It favors companies with strong management teams that have the ability to grow both organically and through acquisition. The firm’s website lists 14 current portfolio companies, including retailers Boot Barn, Petco and hhgregg.

Adviser LP Capital Advisors recommended the commitment to the New Mexico State Investment Council in part because of the firm’s “consistent performance across multiple economic cycles,” according  to the minutes.

LP Capital Advisors also recommended the fund because Freeman Spogli has had “very little turnover in senior management,” the fact that “a lot of the partners have come up through the ranks,” and that the firm has “created a transition plan away from the founders,” according to the minutes.

Fund VI reported a multiple of 1.25x and an IRR of 11.1 percent, as of June 30, 2013, according to New York City Fire Department Pension Fund, an investor in Fund VI. Freeman Spogli’s 2003 vintage Fund V had a multiple of 2.19x and an IRR of 17.2 percent during that same period, the pension fund reported.

Over the years Freeman Spogli’s limited partners have included California Public Employees’ Retirement System, California State Teachers’ Retirement System, Connecticut State Treasurer and the Florida State Board of Administration, according to Thomson One, a product of Thomson Reuters (publisher of Buyouts).