Firms & Funds

Bass to chip in at least $200 mln to Oak Hill IV

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oak tree
Vistitors check out the sights around the Angel Oak tree in Charleston, South Carolina September 24, 2013. Massive canopy shades stretching more than 17,000 square feet and a trunk wider than 25 feet in circumference have drawn generations of visitors to the centuries-old live oak tree on an island near historic Charleston. A group aiming to preserve the majestic tree for decades to come is racing against a fall deadline to raise the $1.2 million needed to protect surrounding land from development that environmentalists say would harm the oak's health. REUTERS/Randall Hill (UNITED STATES - Tags: ENVIRONMENT POLITICS) - RTR3FG1A
  • Oak Hill’s newest fund targeting $2 bln
  • GP commitment, with Bass, will be $300 mln
  • Firm had raised more than $1.2 bln through July

Robert Bass will commit at least $200 million to Oak Hill Capital Partners’ newest flagship fund, an investment memo Buyouts obtained from Minnesota State Board of Investment shows.

Oak Hill was founded in 1986 as Robert Bass’s family office and later began raising capital from third-party institutional investors. The firm’s newest fund will also include $100 million from Oak Hill employees, the memo says.

At its $2 billion target, Robert Bass’s and Oak Hill’s contributions to Fund IV would represent 15 percent of the vehicle’s commitments.

Bass and Oak Hill investment professionals agreed to commit roughly $500 million to the firm’s previous flagship fund, representing roughly 13 percent of the $3.8 billion it eventually raised, according to Los Angeles Fire and Police Pension documents from 2007.

Oak Hill launched Fund IV last year with a $3 billion target, according to SEC filings. The firm had raised $1.27 billion toward a reduced target of $2 billion as of mid-July. Oak Hill was also running a stapled secondary process as part of its fundraise, Buyouts reported in June.

Minnesota committed $150 million to the fund at its December board meeting. Oak Hill did not respond to a request for comment.

Fund IV features a narrower strategy than what Oak Hill pursued with Fund III. Several of the firm’s investment professionals, including its head of technology, Robert Morse, left to form their own private equity firms.

As the makeup of the firm’s investment personnel shifted, so did its focus: The firm no longer considers healthcare and technology core sectors. Oak Hill removed them from its website at some point in 2014, Internet archives show.

Oak Hill’s previous three flagship funds have generated relatively consistent returns, netting internal rate of returns of 11 to 12 percent and multiples of 1.7x to 1.9x as of June 30, according to Minnesota documents. (See chart.)

Oak Hill Capital Partners Track Record (through June 30, 2016)
Fund Vintage Total Committed Capital Net IRR Net MOIC
Oak Hill Capital Partners I 1999 $1.5 bln 12 pct 1.9x
Oak Hill Capital Partners II 2004 $2.4 bln 11 pct 1.7x
Oak Hill Capital Partners III 2007 $3.8 bln 11 pct 1.7x
Source: Minnesota State Board of Investment, Buyouts

Oak Hill has offices in New York, Menlo Park, California, and Stamford, Connecticut. The firm has raised more than $9 billion since its inception.

Action Item: For more information about Oak Hill, visit www.oakhillcapital.com 

Visitors check out the sights around the Angel Oak tree in Charleston, South Carolina, on Sept. 24, 2013. Photo courtesy Reuters/Randall Hill