Palladium Equity vaults $800 mln target as fundraising momentum soars

Firm: Palladium Equity Partners

Fund: Fund IV

Target: $800 million

Hard cap: $1 billion

Palladium, launched in 1997 by Marcos Rodriguez and David Perez, got a $100 million commitment this month from the Los Angeles County Employees Retirement Association, according to David Kushner, chief investment officer for LACERA.

This follows another $100 million pledge from the Oregon Investment Council in December.

Palladium also has received commitments from state pension systems in Connecticut, Illinois, New York City, California and Texas.

Fund IV has surpassed its $800 million target and will likely eye its $1 billion hard cap, according to a person with knowledge of the firm. Fundraising could wrap up by the end of the first quarter or shortly after, the person said.

Palladium declined to comment.

Fund IV has had a lengthy fundraising, having held a first close in the summer of 2012, but momentum has been building as the firm has scored some strong exits and distributed a record amount of capital to LPs. Eight of Palladium’s investments have generated investment multiples of at least 2x, according to LACERA documents.

“While staff is impressed by the two 9x homeruns, of greater significance is the disciplined value creation process that manifests itself across the entire portfolio,” the documents said.

Palladium’s 9x investments are American Gilsonite, which is generating an overall 10x multiple, and a Fund II investment, Prince Minerals, which is generating a 9.1x multiple, the documents said.

 Fund III, which collected $775 million in 2005, was generating a net 18 percent internal rate of return and a 2x multiple as of September 30, 2013, according to information from LACERA. Fund II, which collected $231 million in 2000, was producing a net 12 percent IRR and a 2.9x multiple, according to the LACERA information.

By last year, the firm had given back almost all the capital in Fund III to LPs, while all or more of the capital in Fund II has been given back to LPs, the person said.

Chris Witkowsky is editor of peHUB