Clearlake’s Fund III Tops Target With $789M Close: Corrected

The close was substantially above the fund’s initial $600 million target. Clearlake invests in mid-market companies in a variety of industries, but focuses mainly on turnarounds and reorganizations, especially companies facing difficult financial or operational challenges.

Jose Feliciano, Clearlake’s founding partner, told Buyouts that the fundraising was helped in part by the fact that “nearly 100 percent” of investors in the previous fund decided to re-commit to Fund III. In addition, he said, “when you look at special situations and turnaround investing in the middle market, a lot of our competitors … have moved up-market pretty dramatically, people like Platinum Equity or the Gores Group or my old firm, Tennenbaum Capital Partners…. Over the past five years, a lot of those firms have moved from being sub-$1billion firms five years ago to $3 billion, $4 billion or $5 billion firms today. (In doing so), they have left a void in the low-end of the middle market. There are not that many of us.”

Among the investors pledging to the new fund were the Los Angeles County Employees’ Retirement Association, which committed $75 million, the State of Wisconsin Investment Board, the New York State Teachers’ Retirement System and the Illinois Teachers’ Retirement System, each of which contributed $50 million, and the Connecticut Retirement Plans and Trust Funds and West Virginia Investment Management Board, which each contributed $40 million.

The firm, which was founded in 2006, now manages $1.4 billion in capital altogether.

This past month, the firm invested in Florida-based Swiss Watch International, which owns several retail Web sites for watches, including WorldofWatches.com, eWatches.com, TheWatchery.com and SmartBargains.com. In the last few months, the firm also bought two mobile technology firms: Seattle-based NetMotion, which makes virtual private networks and software for mobile devices, and Mformation Technologies, an Edison, N.J.-based maker of mobile device management software.

Helping to raise Fund III was the Park Hill Group. The fund’s legal counsel was Paul, Weiss, Rifkind, Wharton & Garrison.

CORRECTION: Fund III raised $789 million. A version of this story posted on Jan. 4 understated the amount as $785 million.