Searchlight gets ready to launch Fund II

  • Firm to target up to $1.5 bln for Fund II
  • Searchlight wrapped up debut fund on $860 mln in 2012
  • LPs question lack of full exits in Fund I

Two LPs who spoke with Buyouts said they haven’t yet seen private placement memorandums on the fund. It’s not clear when the fund will officially launch, though one source said PPMs will likely go out in March.

LPs gravitated to Searchlight’s debut fund, which closed on $860 million in 2012. Investors liked the firm’s pedigree: Searchlight was formed by Eric Zinterhofer, former co-head of media and telecommunications at Apollo Global Management; Oliver Haarmann, a former partner at Kohlberg Kravis Roberts who helped build the firm’s European operations; and Erol Uzumeri, who formerly led the private equity business at the Ontario Teachers’ Pension Plan.

The two LPs said they were enthusiastic about the new offering. One question LPs will be asking the firm is the lack of fully realized investments in Fund I. The absence of any full exits can be a bit “uncomfortable,” one LP said.

Searchlight Capital I was generating a 1.2x multiple as of March 31, 2014, according to performance information from alternative asset data provider Bison.

The firm has invested at a steady clip, announcing three investments in December. Searchlight invested $75 million in telecommunications provider General Communications, Inc, through an unsecured note. Searchlight along with cable company Liberty Global agreed to acquire Choice Cable, the second largest cable provider in Puerto Rico. Also in December, the firm bought a controlling stake in Ocean Outdoor, a UK company that provides digital advertising.

Searchlight focuses on control and non-control investments through various transaction types, including leveraged buyouts, growth equity, recapitalizations and investments through a company’s capital structure, according to the firm’s website.

Emily Melchior, who works in investor relations at the firm, declined to comment.