L Catterton looks to hold more equity with larger fund: source

  • Robust pipeline for deals seen
  • Consumer-focused GP grows flagship fund by $1 bln
  • Firm may lengthen deployment period

L Catterton sees a robust deal pipeline in 2017, with its new flagship fund offering more flexibility to write larger equity checks, according to sources familiar with the firm.

L Catterton Partners VIII LP raised $2.75 billion in five months, exceeding the firm’s predecessor flagship fund by $1.07 billion. The firm may be close to tapping the fund for the first time as it eyes possible deals in its acquisition pipeline, the sources said.

The consumer-focused GP may slightly lengthen the fund’s deployment period after putting the previous fund to work in a little more than three years, the sources said. It’ll also have the option to contribute more equity in larger deals.

Past transactions like the $925 million buyout of Steiner Leisure and the Restoration Hardware deal used to be above L Catterton’s deal range without contributions from LPs or other firms. With Fund VIII, the firm can hold positions itself and speak for the entire equity check on deals, the source said.

A spokeswoman for L Catterton declined to comment.

The firm said Nov. 22 that Fund VIII’s potential investments would range from $60 million to $500 million, aiming at high-growth middle-market consumer companies across North America and Europe.

Catterton Partners VII targeted investments of $30 million to $120 million, an investment memo on the fund for Pennsylvania Public School Employees’ Retirement System shows.

The vintage 2010 Catterton Partners VI-B generated an IRR of 23.1 percent as of Dec. 31, 2015, and an investment multiple of 2.1x for Sacramento Private Equity Partners. The top-quartile threshold for that vintage year is 17.8 percent, according to public-pension-fund data compiled by Buyouts.

The vintage 2008 Catterton Growth Partners fund netted an IRR of 12 percent for Pennsylvania PSERS as of Sept. 30, 2015. The top-quartile threshold for PE funds for that year is 16 percent.

“With rapidly shifting forces impacting consumer behaviors, preferences and tastes across the globe, there has never been a more compelling and dynamic time to back attractive consumer brands,” Scott Dahnke, global co-CEO of L Catterton, said in a statement.

L Catterton is based in Greenwich, Connecticut, and operates 17 offices worldwide.

Action Item: Contact L Catterton, http://www.lcatterton.com/ContactUs.html

A woman shops for handbags at a Gucci luxury boutique at the IFC Mall in Shanghai on June 4, 2012. Photo courtesy Reuters/Carlos Barria