Kelso targets $2.5 bln for Fund X

  • New fund to invest up to $250 mln per company
  • Fund IX held final close in 2016 with more than $600 mln from Kelso
  • Maine PERS, Louisiana Teachers’ among Fund X LPs

Kelso & Co is raising $2.5 billion for its 10th flagship fund, according to a Hamilton Lane report prepared for Teachers’ Retirement System of Louisiana.

As with previous funds, Kelso is expected to invest Fund X in North American mid-market companies valued at up to $1.5 billion, according to the report. The firm would likely invest between $100 million and $250 million of equity per deal, giving Fund X enough runway to make between 10 and 15 platform investments.

At its target size, Fund X would be roughly the same size as Kelso’s previous fund, which held a final close in mid-2016 on $2.56 billion. Fund IX’s total included more than $600 million of committed capital from the firm itself, Buyouts reported.

The firm’s deployment of Fund IX was well underway at the time of the final close and, at the time, one source said they expected Kelso could be back on the market as early as 2017.

The Hamilton Lane memo indicates due diligence on Fund X began in August. Hamilton Lane’s investment committee approved a commitment to the fund in January.

Louisiana Teachers’ committed up to $100 million to the fund in March. Maine Public Employees Retirement System also committed up to $45 million to Fund X last month.

Kelso was still in the process of investing Fund IX earlier this year. On March 2, the firm announced one of its portfolio companies, infrastructure terminal business Zenith Energy, had acquired Arc Logistics.  

Fund IX was marked as netting a 43.2 percent internal rate of return as of Sept. 30, 2017, according to the Hamilton Lane memo. The fund is still relatively young and had yet to return capital to its limited partners as of that date.

Kelso was founded in 1971 by Louis Kelso and Joseph Schuchert. It’s led by Chairman Frank Nickell and Co-CEOs Frank Loverro and Phil Berney.

The New York firm has $9.5 billion of assets under management.

Kelso did not respond to requests for comment.

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