TowerBrook Capital Eyes $3B Fund IV

Just four years after raising a mega-sized $2.8 billion third fund, TowerBrook Capital Partners is working on Fund IV, with a goal of closing a fund of up to $3 billion, two sources told sister Web site peHub.

The buyout shop has not yet set a specific schedule for the fundraising. The transatlantic firm is trying to buck a pair of trends, by defying the difficulties that many U.S. mid-market firms have experienced trying to secure LPs, and also by simultaneously charting a course into Europe at a time when its economic future remains very much in flux.

TowerBrook—which has had a history of making consumer space deals among other investments—will focus in part on making health care transactions and energy plays with the new pool. TowerBrook’s largest competitors—such as TPG Capital and Kohlberg Kravis Roberts & Co.—have increasingly made big natural gas bets, and private equity pros still believe the industry is ripe for investment.

Recently, TowerBrook has made some high-profile exits. Luxury goods maker Labelux gobbled up TowerBrook’s Jimmy Choo last year, providing a massively successful £500 million ($793 million) exit. Among the firm’s existing investments is Sports Capital Holdings, the holding company for partnership interests in the NHL’s St. Louis Blues.

TowerBrook has still been deploying capital—although its most recent fund is more than half invested. Earlier this year, it bought AAC Capital UK’s ventilation asset Volution Group Ltd and, more recently it struck a pair of deals to put together a finishing business for metals and other components.

According to TowerBrook’s site, the firm closed its $2.8 billion TowerBrook Investors IV LP fund in November 2008 and, prior to that, a $1.3 billion fund. According to figures from the California Public Employees’ Retirement System, that fund’s vintage year is 2005.

CalPERS figures posted online show TowerBrook’s 2001 fund generated a 3.00x multiple, the firm’s 2005 Fund II generated a 1.4x investment multiple and its third fund, the $2.8 billion vehicle, has thus far generated a 1.3x multiple. Across three funds, CalPERS has already backed TowerBrook with more than $500 million.

TowerBrook tends to avoid auctions and to take long layoffs between deals—which, apparently, has helped. Across 2010, the firm didn’t participate in any major transactions, and it shifts its weight between its U.S. and U.K. offices in accordance with each region’s deal environment. Still, it has put about half of its 2008 $2.8 billion fund to use, peHub was told by a source.

According to Thomson Reuters data, prior LPs include Arizona Public Safety Personnel Retirement System; Conversus Capital; Indiana Public Employees’ Retirement Fund; Massachusetts Pension Reserves Investment Management Board; Ontario Municipal Employees Retirement System and the San Francisco City and County Retirement System.

(Jonathan Marino is editor/columnist for peHub.)