Oak Hill returns with $3 bln target, $800 mln less than prior fund

The firm filed four Form Ds with the SEC on August 25 indicating a $3 billion target for Oak Hill Capital Partners IV, 21 percent less than the $3.8 billion it raised for Fund III, which the Oregon Public Employees Retirement Fund pegs as a 2007 vintage vehicle.

Fund III was generating a 9.7 percent internal rate of return as of March 31, according to Oregon documents. Fund II, a $2.5 billion 2004 vintage, was generating a 10 percent IRR as of the same date.

Last year, Reuters reported that Oak Hill would likely seek between $2 billion and $3 billion for Fund IV.

Lazard is listed as an associated broker dealer on the fund, according to the filings.

Oak Hill Vice President Andrea Joseph declined to comment.

Fewer core sectors

While it is not clear why Oak Hill set a lower target for Fund IV, the firm pared some core sectors from investment strategy over the last year as it prepared to return to market with Fund IV, according to Internet archives and pension documents.

The firm planned to invest its previous fund in six core sectors, according to Oregon investment council meeting materials, including basic industries; business and financial services; consumer products; healthcare; media and telecommunications; and technology.

Oak Hill’s website no longer lists healthcare and technology as core investment segments, as it did prior to 2014.

The firm’s tighter strategic focus was likely triggered by a series of departures over the last few years. In 2013, former technology team chief Robert Morse left Oak Hill to launch Strattam Capital. Charles Patton, a partner specializing in the healthcare sector, left the firm in 2014 but continues to advise Oak Hill and its portfolio companies, according to reports.

At least five of the 12 partners the firm listed on its website in late 2008 have left Oak Hill to launch their own ventures or join other firms. In addition to Morse and Patton, Michael Green relocated to Australia to launch Green Capital Partners in 2013, and Rowan G.P. Taylor founded Liberty Hall Capital Partners in 2011. John Malfettone, previously the firm’s chief compliance officer, is now a senior managing director at Clayton Dubilier & Rice.

Oak Hill has hired at least two new partners since 2014. Steven Pucinelli joined the firm as a partner earlier this year after 15 years at Investcorp International. Also, former J.H. Whitney & Co Senior Managing Director Brian Cherry joined Oak Hill’s industrials group in 2014.

Oak Hill was founded in 1999 by noted investor and billionaire Robert Bass after investing more than $1.2 billion in 26 deals over roughly a decade, according to the firm’s website. Oak Hill manages more than $8 billion of committed capital and has offices in New York, Stamford and Menlo Park.