Philly Goes For Levine Leichtman Buyout Fund

The $5.2 billion City of Philadelphia Board of Pensions and Retirement last month approved a $25 million commitment to lower-middle market buyout fund Levine Leichtman Capital Partners IV LP, according to Christopher McDonough, chief investment officer.

The fund joins a diversified portfolio that also includes, among recently committed to funds, Altaris Healthcare Partners II LP ($20 million); KPS Special Situations Fund III LP ($20 million); Platinum Equity Capital Partners II LP ($20 million); Riverside Capital Appreciation Fund V LP ($20 million); and Sterling Capital Partners III LP ($20 million).

The city’s target range for alternative investments is 6 percent to 11 percent. Individual commitments from the city tend to run between $15 million and $30 million. Its consultant is Rogerscasey, and its advisors are Fairview Capital Partners for funds of funds and Franklin Park Associates.

Levine Leichtman Capital Partners IV is a $1 billion-target structured equity fund, with a hard cap of $1.5 billion; it reached a first close in June of $425 million. According to a presentation made to the New Mexico State Investment Council by Arthur Levine, co-founder of Levine Leichtman Capital Partners, the firm acquires companies, using relatively little leverage, with revenues of $100 million to $500 million in the manufacturing, service and consumer products sector. Levine said that, on fully realized deals, which compose about two-thirds of the firm’s portfolio, the firm has achieved gross IRRs of about 46 percent; and on the remaining one-third, a 14 percent IRR.

Other recent pledges to Levine Leichtman Capital Partners IV include the New Mexico State Investment Council’s commitment in April of $35 million, which is its second investment with the firm. (Previously the limited partner committed $35 million to the $500 million, 2003 vintage third fund.) Also, the New York State Common Retirement Fund made a $50 million commitment to Fund IV in May. In June, New Mexico Educational Retirement Board committed $50 million.