Kansas Pledges $25M To Towerbrook’s Third Fund

The $13 billion Kansas Public Employees Retirement System recently approved a pledge of up to $25 million in TowerBrook Investors III LP, a new relationship for the pension fund.

London and New York-based TowerBrook Capital Partners, with more than $3.5 billion under management, is seeking $2.75 billion for Fund III. As of April, it had secured commitments of more than $760 million. Towerbrook Capital targets mid-sized and large companies in Europe and North America. It invests mainly in leveraged buyouts, leveraged build-ups and distressed situations. Portfolio companies include luxury shoe brand Jimmy Choo and Sports Capital Holdings LLC, which owns the St. Louis Blues professional hockey team.

TowerBrook Investors II LP closed in March 2006 with $1.3 billion. Towerbrook Investors I LP, as of year-end, had generated a net IRR of 41.5 percent and an investment multiple of 2.8X for the California Public Employees’ Retirement System. Towerbrook Capital, which was spun out of Soros Private Equity in April 2005, was still effectively part of Soros when it raised Fund I. CalPERS, the Massachusetts Pension Reserves Investment Management Board and the Indiana Public Employees’ Retirement Fund have all committed to Fund III. UBS Securities is serving as the placement agent.

The Kansas Public Employees Retirement System had an actual alternative allocation, which includes LBOs, venture capital, distressed debt, mezzanine investments and natural resources, of 3.1 percent, as of July 31, 2008, although the target allocation was recently raised from 5 percent to 6 percent, according to Robert Vince Smith, chief investment officer. The LP has also backed OCM Opportunities Fund VII LP and Warburg Pincus Private Equity Fund X LP, making both commitments in November 2007.

The $25 million pledge follows the suggestion of Cheri Woolsey, alternatives investment officer, and LP Capital Advisors, the pension fund’s private equity consultant.