T.H. Lee nears fund VI close

Thomas H. Lee Partners is nearing the finish line for its new $9 billion fund, although the firm took longer to raise the fund, compared to its mega-fund peers.

The Boston-based buyout shop has raised more than $7 billion for Thomas H. Lee Equity Partners VI and has more than enough verbal commitments to surpass the $9 billion hard cap, according to a source familiar with the fund. The PPM stated the fund had a goal of $8 billion. “The firm’s been at it for a long time,” says one limited partner.

T.H. Lee has marketed its sixth fund for nearly two years, having initially announced a goal of $6 billion. By contrast, Providence Equity Partners, Apollo Group and Texas Pacific Group each spent between four and six months raising their most recent mega-funds.

T.H. Lee has employed a rolling set of closes that has allowed it to engage in a series of deals as it builds the fund. The firm is sitting on two pending deals, the buyouts of Spanish-language TV station Univision and broadcasting giant Clear Channel Communications.

Whatever resistance T.H. Lee encountered on the fund-raising circuit appears related to two factors. First, the firm’s eponymous founder left in March 2006 as part of a succession plan that was mapped out in 1999. Although Lee had ceded control of day-to-day operations long before his departure, some limited partners questioned how effective the firm could maintain the franchise without its founder. Another hiccup came with the Chapter 11 filing of portfolio company Refco, the futures trader. “Refco hit the skids and Tom left, and that raised some questions,” says a limited partner from a prior fund.

T.H. Lee is now run by the trio of Scott Sperling, Scott A. Schoen and Anthony J. DiNovi.

Meanwhile, Lee himself is just getting started on his firm’s first fund, a $2.5 billion pool aimed at mid-market deals valued at between $100 million to $500 million. He spent the last year hiring a staff in a New York office and recently issued a draft PPM for Lee Equity Partners.

“He’s been out hiring a team and putting all the bodies together,” says an LP source from T.H. Lee’s sixth fund.

Another limited partner, who has previously invested in T.H. Lee vehicles, said that his shop has decided to pass on Lee Equity Partners, citing concerns that Lee has been out of the game for too long and is coming to market with a first fund in a crowded field.

Lee was unavailable to comment.