The fund will make co-investments alongside funds in which Washington is already an investor, according to an advisory announcing the commitment. It will focus on buyout and growth equity investments.
This commitment is Washington’s fifth with Fisher Lynch. The previous funds were a series called Fisher Lynch Co-Investment Partnership. The most recent fund was still relatively new, so returns may not yet be meaningful; the earlier funds appear to have improved in performance over time.
Washington committed $700 million to Fund III of that series in 2016, and $750 million to Fund IV in 2019. As of September 30, 2020, the 2019 vehicle had a 10 percent net internal rate of return and 1.1x total value multiple and the 2016 vehicle had a 21.84 percent net IRR and 1.6x multiple, according to documents on the pension’s website.
Before that, Washington committed $500 million to Fund II in 2011 and its initial investment was for $250 million to Fund I in 2006. Fund II had a 19.39 percent net IRR and a 2.2x total value multiple, as of the end of Q3 2020, and Fund I had a 6.87 percent net IRR and a 1.5x multiple.
All told, Washington has committed $2.2 billion to Fisher Lynch over the past 15 years, meaning this latest commitment nearly doubles the amount the firm is managing for Washington. According to Buyouts data, there were other LPs in the first two vehicles, including Oregon State Treasury, but it was unclear if there were any other LPs in Funds III and IV. Washington did not respond to a request for comment.
According to its website, Fisher Lynch is a “boutique private equity co-investment specialist” that has evaluated deals from more than 200 private equity managers and closed over 120 co-investments during its history. It has offices in the Bay Area, Boston and London. It is led by managing directors Marshall Bartlett, Brett Fisher, Leon Kuan and Marcus Wood. Co-founder Linda Lynch stepped down in 2016 and now serves as a senior advisor. The firm did not respond to a request for comment.
Washington also approved several other private equity commitments at its meeting this week, including $200 million to Providence Strategic Growth V, the latest offering from PSG, $600 million to TA XIV, the latest fund from growth equity firm TA Associates, and $750 million to KKR North America Fund XIII, the latest KKR fund.
As of February, Washington’s fund value was $127.78 billion.
Action Item: read Washington State Investment Board’s most recent private equity performance report here.