Platinum Equity raises lion’s share of target for latest flagship fund

Platinum Equity secured $10.66 billion for a sixth flagship buyout offering, putting the vehicle within reach of its target.

The firm this week disclosed the haul of Platinum Equity Capital Partners VI in a Form D filing. At $10.66 billion, the fund is nearing its final goal, reported in pension documents as either $12 billion or $15 billion, though the latter may be the hard-cap.

The flagship is already the biggest in Platinum’s almost three-decade history, with the amount raised to date just surpassing the $10 billion brought in by Fund V in 2019.

Platinum’s capital raising is taking place against the backdrop of a tough market environment. A slower fundraising pace last year, caused mostly by overstretched LPs, continued in the first quarter, with $124 billion collected by North American private equity pools, down 20 percent from a year earlier, according to Buyouts data.

Platinum was founded in 1995 by chairman and CEO Tom Gores, a billionaire entrepreneur and owner of the National Basketball Association’s Detroit Pistons. Earlier this year, Jacob Kotzubei and Louis Samson joined Gores in the top leadership after being named co-presidents.

Fund VI will maintain the strategy observed by Platinum flagships since 2004. It will make control investments in underperforming, undermanaged and undervalued mid-market and large-cap companies primarily based in North America. These will operate in a variety of sectors, among them consumer, finance, healthcare, industrials, media, natural resources and technology.

At a time of economic uncertainty that includes the prospect of a recession, Platinum’s experience with complex deals, such as carveouts and special situations, may bring to the vehicle a wealth of opportunities.

Fund VI is expected to make 15 to 25 investments, with equity checks ranging from $150 million to $2.5 billion, a Los Angeles City Employees’ Retirement System report said. Target companies will have enterprise values of $500 million to $5 billion-plus.

Platinum has completed more than 350 acquisitions since inception. Its latest deals include the January carveout of Imerys’ high-temperature solutions unit at a value of €930 million ($997 million). The company, now operating as Calderys, merged with the recently acquired HarbisonWalker International, a refractory products and services supplier.

The firm has since struck an agreement to acquire the JELD-WEN Australasia windows, doors and related building products business from JELD-WEN for $461 million.

Along with the flagship strategy, Platinum has a small-cap strategy focused on buyout deals in the lower mid-market as well as a credit platform.

Platinum Equity Capital Partners V was earning a 1.48x multiple as of Q3 2022, according to Buyouts data. As of March 2022, it was earning a 49.5 percent net IRR, the LACERS report said. Buyouts data had Fund IV generating a 2.21x multiple and a 31.1 percent net IRR as of Q2 2022.

Gores, Kotzubei and Samson oversee a global team located in Platinum’s Los Angeles headquarters and offices in Boston, Greenwich, New York, London and Singapore. More than 100 team members are investment professionals.

The firm did not respond to a request for comment.