Levine Leichtman rolls out latest flagship vehicle with $3.3bn target

Levine Leichtman Capital Partners is back in the market with a seventh flagship buyout offering set to bring in $3.3 billion.

The Los Angeles private equity firm disclosed the target for Levine Leichtman Capital Partners VII in Form D filings. Campbell Lutyens and Greshler Finance are the placement agents.

At $3.3 billion, Fund VII would be the largest pool in Levine Leichtman’s nearly four-decade history. It would be 32 percent larger than Fund VI, closed in 2019 at $2.5 billion.

Fund VII is also the first flagship since Levine Leichtman’s succession. In 2020, founders Arthur Levine and Lauren Leichtman stepped back from day-to-day operations and became co-chairs. Their prior responsibilities were taken up by managing partners Matthew Frankel and Michael Weinberg.

Fund VII enters choppier fundraising waters than those navigated by its predecessor. In the third quarter, 252 funds collected $111 billion, according to Buyouts’ data, down 20 percent from three months earlier, this year’s second consecutive quarterly dip in inflows.

Established in 1984, Levine Leichtman pioneered structured equity investing in mid-market companies, Frankel told Buyouts in a 2020 interview. No other investors pursue the strategy in exactly the same way, he said.

One of the advantages of the approach is ensuring regular cashflow from investments, rather than relying solely on gains realized through exits.

Levine Leichtman uses both debt and equity in its deals, but with the goal of securing control positions. It avoids overleveraging businesses. Opportunities are sourced in sectors with characteristics like durability, resilience and high cash-generation, such as business services, education, engineered products and franchising.

Flagships target mostly US mid-market companies with revenue of about $50 million to $250 million. The firm’s two other fund platforms, which deploy the same structured equity strategy, target US and European lower-mid-market companies.

Since inception, Levine Leichtman has invested in more than 100 businesses. A recent addition to the portfolio is Technical Safety Services, a life sciences-focused testing, inspection and certification services provider. It was acquired this year by Fund VI from Edgewater Funds and JZ Partners.

Levine Leichtman has also been active selling portfolio assets. Examples include Monte Nido, an eating disorder treatment specialist, sold this year to Revelstoke Capital Partners. EBITDA was tripled during Fund V’s hold period, PE Hub reported in September.

Another is Hand & Stone, a franchisor operating in the massage and facial spa industry, sold this year to Harvest Partners. In this case, EBITDA was increased by more than 8x under Fund V’s ownership, PE Hub reported in June.

Levine Leichtman’s team totals more than 70 professionals, including over 40 investment professionals. They are based in Los Angeles or in regional offices in New York, Chicago, Charlotte, Miami, London, The Hague, Stockholm and Frankfurt.

The firm declined to provide a comment on this story.