LP memo: Hellman & Friedman plans final close for October

  • Targeting $8.9 bln with a $10.25 bln hard cap
  • GP to commit at least $450 mln to Fund VIII
  • Firm is targeting first close in September

“(The firm) is targeting a first close during September 2014 and anticipates a final close on the following month,” according to the memo.

The San Francisco-based firm is targeting $8.9 billion with a $10.25 billion hard cap, excluding general partner commitments. The GP will commit at least $450 million, according to the memo.

Limited partners will be charged a 1.5 percent management fee on committed capital through the investment period, with a 0.75 percent fee thereafter, according to the San Francisco Employees’ memo.

Fund VIII will likely make as many as 15 platform investments across North America and Western Europe, with a focus on companies in the software, financial and business services, media and marketing sectors, according to a Cambridge Associates memo released by San Francisco Employees. The fund will typically invest $300 million to $1 billion of equity per deal.

Hellman & Friedman closed Fund VII on $8.8 billion in 2009. That fund, which is approximately 63 percent drawn, had netted an 8.7 percent internal rate of return as of March 31, according to the San Francisco Employees’ staff memo.

Fund V and Fund VI have performed better, netting IRRs of 31.1 percent and 11.1 percent as of the same date, according to the memo. San Francisco Employees’ latest commitment to Hellman & Friedman is the retirement system’s seventh with the firm.

The memo also indicates that Hellman & Friedman Chairman Brian Powers will step down from his role before the end of the year. He will stay on with the firm as an adviser.

Hellman & Friedman’s day-to-day operations are currently overseen by Chief Executive Officer Philip Hammarskjold and Deputy CEO Patrick Healy. Managing Director David Tunnell sits on the firm’s investment committee as well, according to the San Francisco Employees’ memo.

“The succession plan appears to be a well-planned and executed process, creating minimal disruption to the management of the firm,” according to the memo.

Hellman & Friedman did not immediately respond to a request for comment.

The timing of Powers’s departure mirrors that of the previous chairman and firm co-founder Warren Hellman, who ceded the chairmanship to Powers in 2009 upon Fund VII’s closing. Hellman died in 2011.

The 2009 statement announcing Fund VII’s close also named Hammarskjold as the firm’s new chief executive officer and Healy as its deputy CEO.

Hellman & Friedman was founded in 1984 and maintains offices in San Francisco, New York and London. The firm has raised more than $25 billion in committed capital since inception, according to its website.