Thomas H. Lee hits halfway point for Fund VII

The new buyout fund comes after the firm’s vintage 2006 Fund VI drew in $8.1 billion. That pool rang up an internal rate of return of 6.9 percent and an investment multiple of 1.4x as of Sept. 30 for the California Public Employees’ Retirement System. 

Thomas H. Lee listed a date of first sale of Sept 26. for Fund VII, according to a Form D filing.

Speaking at Buyouts Insider’s Buyouts East conference on March 25, TH Lee Co-President Scott Sperling didn’t touch on the topic of fundraising, but he said the deal environment remains challenging given high prices for target companies.

“Valuations are at the upper end where you’d expect the upper band to be,” he said in his keynote address. “But you don’t have metrics flashing that things (in the overall economy) are going to drop quickly. We have to be cautious given where multiples have been.”

TH Lee is seeing strength across the board at most of its portfolio companies, with a robust environment for retail and consumer-oriented businesses. “We’ve been in an economy that’s had a slow recovery and that’s the bad news,” Sperling said. “The good news is the recovery has lasted longer.”

He said he is not seeing any definitive signs for the top of the cycle, “even though the length of time since the last recession would suggest a late cycle.”

Overall, TH Lee has been focusing on three core segments: business and financial services; consumer and healthcare; and media and information services.

In one fresh transaction, TH Lee offered 5.6 million shares of Aramark valued at $180 million in a secondary stock sale. The firm continues to own about 13.7 million shares in the food services company, according to a filing. It has made a return of about 4x on the deal thus far, according to a source.

The firm has also made about 3x on its stake in Nielsen NV, which was taken public in 2011. TH Lee was one of six sponsors to offer 8 million shares of Nielsen stock in March for gross proceeds of $360 million.

In another exit last year, TH Lee more than tripled its money on Carlyle Group’s $4.8 billion deal to buy Acosta Sales & Marketing Co, according to a report.

On the acquisition front, the firm has moved to buy U.S. hospice firm Curo Health Services from GTCR LLC for a reported value of about $700 million.

Last year, TH Lee said it would invest up to $200 million to form insurance distribution company Prime Risk Partners with Bret Quigley and Adam Meyerowitz.