Los Angeles County OKs $150 mln for Hellman & Friedman VIII

  • H&F Fund VIII has $10.25 bln hard cap
  • Firm targeting first close in September
  • Final close expected before end of year

The Los Angeles County Employees Retirement Association approved a commitment of up to $150 million to Hellman & Friedman Capital Partners VIII at its Sept. 10 meeting, Chief Investment Officer David Kushner told Buyouts in an email.

San Francisco-based Hellman & Friedman is scheduled to hold a first close on roughly 90 percent of the fund’s commitments on Sept. 19, according to a GCM Grosvenor Private Markets due diligence report included in Los Angeles County meeting materials. The firm has set a $10.25 billion hard cap for Fund VII and is expected to hold a final close before the year ends.

Hellman & Friedman’s sixth fund holds a 30 percent ownership stake in GCM Grosvenor Private Markets’s parent company, according to a memo from Los Angeles County investment staff. Los Angeles County investment staff determined that the firm does not “interfere in the day-to-day operational aspects” of its investment adviser, according to an investment memo, which also notes that GCM Grosvenor did not receive any economic benefit from recommending a commitment to Fund VIII.

Buyouts reported in August that Hellman & Friedman may hold a final close in October, citing San Francisco Employees’ Retirement System documents. San Francisco Employees’ Retirement System approved a commitment of up to $50 million to Fund VIII.

Hellman & Friedman is charging investors a 1.5 percent management fee on committed capital during Fund VIII’s investment period. The management fee falls to 0.75 percent of invested capital after the investment period, according to the due diligence report. The general partner’s commitment will be equal to at least 4 percent ($450 million) of committed capital.

Hellman & Friedman declined to comment.

Fund VIII will invest in large buyouts in North America and Europe, typically investing $300 million to $1 billion of equity per deal, according to a Los Angeles County memo. Fund VIII’s investment strategy is a continuation of the firm’s previous funds. The vehicle will invest across a variety of industries including financial services, software/data services, business services, healthcare, Internet/digital media and energy/industrials.

Los Angeles County is a limited partner in Hellman & Friedman’s 2004 vintage Fund V and its 2007 Fund VI. Fund V had netted a 28.1 percent internal rate of return and a 2.7x multiple as of March 31, according to Los Angeles County documents. Fund VI had netted a 12.5 percent IRR and 1.7x multiple as of the same date.

Fund VII, the firm’s $8.9 billion 2011 vintage fund, was 64 percent drawn as of July, according to Los Angeles County documents.

The $47 billion retirement association also had been scheduled to vote on a proposed $150 million commitment to Baring Asia Private Equity Fund VI. Investment staff withdrew its Baring recommendation, Kushner said. He did not respond immediately to a request for additional information about the withdrawal.

Los Angeles County Employees Retirement Association had an 8.4 percent allocation to private equity as of June 30, according to a performance review made available by Kushner. The retirement association was 2.6 percentage points below its 11 percent target for the asset class as of the same date.