Firm: Riordan Lewis & Haden Equity Partners
Fund: RLH Investors III LP
Target: $250 Million
Amount Raised: $380 Million
The new fund was also larger than the firm’s previous fund, which closed in 2007 with $265 million in commitments. Fund II has performed strongly, producing a net IRR of 21 percent along with a net return multiple of 2.1x, according to September 2012 data from the California Public Employees’ Retirement System, which invested $25 million in the fund through its Golden State Investment Fund that is managed by Hamilton Lane. CalPERS was not an investor in Fund III, according to the firm.
Riordan, the former mayor, is no longer involved with managing the firm, but still is invested in the firm’s funds.
RLH, which overall manages $700 million in assets, is led by Chris Lewis, the firm’s managing partner. While some have labeled RLH a growth equity firm, Lewis said he disagrees with the label. “We hold on to companies longer and use less leverage,” Lewis told Buyouts. “The companies we invest in, they already work economically. We are about organic growth. Our strategy is about building businesses.”
And many of RLH’s businesses have strong growth records. The firm trumpeted some of its recent returns, saying that its five most recent exits have yielded an average gross return multiple of 6.7x.
RLH typically makes investments between $10 million and $50 million in businesses that have $20 million and $150 million in annual revenue. The firm concentrates on business services, healthcare and government services sectors.
As for the investors in Fund III, they include the Los Angeles County Employees Retirement System and the Maryland State Retirement and Pension System, each of which has committed $50 million. Overall there are only 24 investors in the new fund.
“We don’t like to have too many investors in our funds,” Lewis said. “We don’t want to have to spend too much time supporting LPs, so we prefer a small group of LPs. We want to spend our time finding and investing in great companies.”