L Catterton set to hold first close on $2.5 bln flagship fund

  • Firm schedules final close for no later than Q2
  • Fund VIII targeting $2.5 bln
  • Firm changes name to L Catterton after Louis Vuitton parent buys stake

L Catterton will hold a first close on its new flagship fund this month, according to a Portfolio Advisors memo. The firm scheduled a final close for no later than the end of the second quarter.

L Catterton set a $2.5 billion target for Fund VIII. The general partner will commit the lesser of $100 million or 5 percent of the fund’s total commitments, according to the memo.

The firm declined to comment.

The Pennsylvania Public School Employees’ Retirement System included the Portfolio Advisors memo in materials on its website. The $51.9 billion public-school pension committed as much as $100 million to Fund VIII on March 11, subject to final negotiation of terms and conditions.

With a commitment to Fund VIII, PSERS would be a limited partner in seven separate L Catterton funds. PSERS’s commitments netted a 10.8 percent internal rate of return and a 1.6x multiple as of Sept. 30, according to a pension investment memo. The firm’s most recent flagship fund, a $1.6 billion 2013 vintage, netted a 17.8 percent IRR with a 1.3x multiple.

As with its previous funds, L Catterton VIII will acquire controlling stakes in middle-market companies in the North American consumer sector, according to PSERS materials. Fund VIII’s portfolio will likely include 10 to 20 companies with investment sizes ranging from $50 million to $250 million.

L Catterton could use Fund VIII to write equity checks of as much as $500 million if it brings co-investors into the deal, according to a PSERS staff memo. The firm divides the consumer sector into four categories: food and beverage; retail and restaurants; branded consumer products and consumer and marketing services.

Fund VIII marks L Catterton’s first flagship offering since the firm changed its name from Catterton in January. The consumer-sector specialist became L Catterton after family holding company Groupe Arnault partnered with LVMH, which owns luxury brands like Louis Vuitton and Givenchy, to acquire a 40 percent stake in the firm.

In February, L Catterton closed its third North American growth equity fund at $615 million, according to a press release. L Catterton Growth Partners III was oversubscribed.

Action Item: To read PSERS’ materials on L Catterton, visit http://bit.ly/1RkKCvr

Photo courtesy of Reuters