Clairvest raises largest fund to date, closing CEP V at $600 mln

Clairvest Group has closed its fifth partnership, Clairvest Equity Partners V LP (CEP V), at its $600 million hard cap.

Today’s announcement by the Toronto-based mid-market private equity firm was certainly expected. In April, peHUB Canada reported that CEP V was likely to wrap up its initial closing at 75 percent of its hard cap.

Clairvest did much better than that—on May 1, it announced a total of $518 million of capital was committed in the first close, or 86 percent of the hard cap.

Clairvest made early headway on its latest fund due to highly responsive existing LPs. These are primarily pension funds, insurance companies, family offices and other institutional investors in Canada and the United States. Jeff Parr, Clairvest’s co-CEO and managing director, told me in April that returning LPs showed both a willingness and an ability to make larger commitments than they had in the past.

It would seem that subsequent investors also responded with enthusiasm. In fact, Clairvest did so well so fast that it is easy to forget that CEP V was commenced in February at a $500 million target.

By all measures, fundraising this time around has surpassed past efforts by Clairvest. CEP V is by far the largest third-party partnership in the firm’s 27-year history. CEP IV, which closed in 2011, raised $467 million.

What is the secret to Clairvest’s success? Well, Parr has put it down in part to an improved North American fundraising environment, more liquid limited partners and a robust exit market. But there were also a few firm-specific factors clearly in play.

Key among them, of course, is performance over the long term. Earlier this year, Clairvest reported that under its existing management team, the firm has accounted for a 2.8x return on realized and substantially realized investments since 1994.

One does not have to think hard to come up with examples of Clairvest realizations and distributions that have contributed to these stats. Last year, the firm won its third “Deal of the Year” from Canada’s Venture Capital & Private Equity Association—for its sale of PEER 1 Network Enterprises.

And just last week, Clairvest reported receiving a distribution of US$100.3 million from Light Tower Rentals following that company’s refinancing. Clairvest obtained 3.1x its investment without giving up its majority stake in Light Tower.

What LP doesn’t like to hear things like that?