Firms & Funds

BET founder’s RLJ Equity Partners is back with Fund II

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  • Robert L. Johnson’s firm targets $300 mln
  • Bethesda-firm inks three deals as of last June
  • Johnson’s Rolodex “very important” to strategy, says LP

Black Entertainment Television (BET) founder Robert L. Johnson’s private equity firm is officially back in the market targeting $300 million for its second flagship fund, according to several sources.

RLJ Equity Partners will likely benefit from LPs’ growing interest in emerging managers, a term often applied to firms run by women or people of color, as well as management teams on their first or second fund, sources said.

“We think it’s going to be successful,” said one LP. “I expect that story to resonate.”

The Bethesda, Maryland-based firm is harvesting investments from its first flagship fund, the $230 million RLJ Equity Partners Fund I. That fund produced a 1.3x net multiple and 9.4 percent IRR as of March 31, according to data provider Bison, which sourced the New York City Teachers’ Retirement System. One market source attributes the most recently reported returns to three newer acquisitions, all of which were still being held at cost.

In June 2014, RLJ acquired industrial cleaning company EnviroVac Holdings. The firm also acquired marketing business MarketCast LLC from Shamrock Capital Advisors in November, and it purchased Phase One Consulting Group in early 2015.

The firm has six other companies remaining in its portfolio, including a stake in Brazilian specialty furniture retailer Tok & Stok, which it acquired through its relationship with The Carlyle Group, which provided seed funding to RLJ when it launched in 2006. Carlyle representatives sit on the firm’s investment and advisory committee, according to its website.

Johnson’s network

Johnson, who launched RLJ after serving on the board of Johns Hopkins University with Carlyle co-founder David Rubenstein, has “never been day-to-day” in the firm’s management, sources said. That said, the media executive’s Rolodex has proven vital to the growth of his firm’s portfolio companies.

For example, Johnson’s introductions led Heinz and Kraft to outsource some of their vinegar production to RLJ portfolio company Fleischmann’s Vinegar, said one source. RLJ later grossed 2.6x on its investment when it sold Fleischmann to Stone Canyon Industries.

“He’s still very important to the execution of the strategy,” said one LP.

Action Item: See RLJ Equity Partners’s website: http://bit.ly/1WlxuVJ