Green Buyout Fund Flush With Cash
In a sign of the Los Angeles financial community’s growing clout, Leonard Green & Partners is expected to announce today it has raised $1.25 billion for Green Equity Investors III, the largest private equity buyout fund headquartered in Southern California.
Strong interest from institutional investors helped boost the fund’s size from the originally planned $750 million to $1.25 billion, partners at the firm said.
Los Angeles buyout firms such as Leonard Green, Freeman Spogli & Co. and the local office of Apollo Advisors are riding a wave of money flowing into equity capital funds nationwide. So far this year, a record $26.7 billion of equity capital has been raised nationwide, compared with $22.9 billion the year before, according to Securities Data Co., a New Jersey data tracker.
Leveraged-buyout firms typically make friendly acquisitions of firms in which management is seeking to exit. Investors returns have averaged 20% to 30% or more per annum.
“The closing of this new fund comes at an opportune time,” said Leonard Green, the firm’s founding partner. “While capital has been relatively easy to access during the past several years, the recent turmoil in the world and U.S. markets has changed this dynamic. However, our capital is available regardless of the financial markets.”
The partners plan to invest an average of $75 million to $100 million in each company, mostly to sponsor management buyouts and recapitalizations. For the right company, however, the investment can reach several hundred million dollars. The partners will target divisions of large corporations, both public and private, and look for opportunities in family-owned firms.
“While we aren’t regionally focused, we prefer investments in Southern California and we’re interested in meeting with owners of firms here,” said Jonathan D. Sokoloff, a partner with the firm. “We have a real visibility here.”
Founded in 1989, Leonard Green has made investments--currently valued at $5.6 billion--in 18 companies in a variety of industries, including retailers such as Hechinger/Builders Square and Thrifty Payless.
Meanwhile, Freeman Spogli, which was founded in Los Angeles in 1983, raised $915 million in March for its latest fund--another sign of Southern California’s growth as a center of private equity capital.
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Debora Vrana covers investment banking and the securities industry. She can be reached via e-mail at debora.vrana@latimes.com.
