H.I.G. targets $1.25bn for investments in challenging situations

H.I.G. Capital is raising its sixth capital partners fund targeting $1.25 billion for investments in complicated situations, according to a person with knowledge of the firm.

H.I.G. Capital Partners VI is being marketed to existing H.I.G. limited partners, the person said. It’s not clear if the firm will also look to bring in external LPs. Fund VI likely has more demand than it needs to hit the target, the person said.

Fund VI is heading for a one-and-done close in July, the person said. A spokesman for H.I.G. declined to comment.

“They’ve looking to buy … busted companies, orphan companies, busted selling processes, something that makes it like a three-legged dog … and then they fix it,” the person said.

H.I.G. has several different fund families. The Capital Partners fund family appears to be an older strategy – the firm closed Capital Partners Fund IV on $750 million in 2006 and Fund V on $1 billion in 2013.

Fund IV was generating a 3.1x total value multiple and a 34.5 percent net internal rate of return as of June 30, 2019, according to performance information from Regents of University of California.

Fund V was producing a 1.5x multiple and a 22.8 percent net IRR as of the same date, according to information from Regents.

More recently, the firm has raised a series of middle market LBO funds, as well as a fund for less complex situations called H.I.G. Advantage. The firm closed its third Middle Market LBO fund on $3.1 billion last year. It raised $3 billion for H.I.G. Advantage Buyout Fund in 2018.

H.I.G. was formed in 1993 by Co-Founders and Co-CEOs Sami Mnaymneh and Anthony Tamer. The firm managed about $32 billion as of Dec. 31, 2019, according to H.I.G.’s Form ADV.

Dyal Capital Partners acquired a minority stake in the H.I.G. management company in 2016.

Action Item: Check out H.I.G.’s Form ADV here: https://bit.ly/36gZ2qT