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LLR Partners targets $1.4bn for technology, healthcare fund amid pandemic

The fund has already attracted investments from Arkansas Teachers and PA PSERS.

LLR Partners is targeting $1.4 billion for its latest growth equity fund, according to pension documents, with a plan to maintain its focus on technology and healthcare, two industries well-positioned within the ongoing coronavirus pandemic.

LLR Equity Partners VI will make growth equity investments in small and mid-market companies in the technology and healthcare sectors, according to a memo on the Arkansas Teacher Retirement System website. The $15 billion pension committed $30 million to the fund.

The firm will target North American companies with between $10 million and $75 million in revenue and less than $100 million in enterprise value, according to the Pennsylvania Public School Employees’ Retirement System website. The fund plans to do about 65 percent in technology and 35 percent in healthcare investments, targeting about 24 to 26 investments of about $20 million to $75 million. Its hard-cap is $1.6 billion.

“While still early, it should also be noted that the disruption caused by covid-19 may result in an improved investment environment. Historically, periods of extreme volatility have been followed by above-average returns in subsequent vintage years for private equity,” PA PSERS staff wrote in a memo. “Investing into this environment with a blue-chip manager is an ideal situation.”

PA PSERS committed $200 million to the fund. It has committed to every LLR Partners fund since the firm was founded in 1999.

Two Pennsylvania officials, treasurer Joe Torsella and banking and securities secretary Richard Vague, recused themselves from the vote. LLR Partners is based in Philadelphia, where almost all of its investment team operates.

In recusal forms obtained by Buyouts, Torsella said he had a “long-standing relationship” with one of the fund’s principals and Vague said he had a “long-standing professional relationship” with the firm and had personally invested in its funds.

The firm has a solid performance record. The firm’s previous fund closed at $1.2 billion in 2018, but has a 2017 vintage. As of March 31, it has a 6.86 percent net internal rate of return and a 1.1x net multiple. LLR Equity Partners IV has a 2013 vintage, a 25.6 net IRR and a 2.0x net multiple.

LLR Partners did not respond to a request for comment on this story.

Action Item: read the PA PSERS memo on LLR Equity Partners VI here.