Coller, Neuberger, GIC emerge as lead investors in TH Lee fund revamp

  • Deal is not yet in election period
  • Involves TH Lee’s largest-ever fund
  • Another high-profile GP uses secondaries on older fund

Coller Capital, Neuberger Berman and Singapore’s GIC sovereign-wealth fund emerged as lead investors on the restructuring process for Thomas H. Lee Partners’ largest-ever fund, sources told Buyouts.

The deal is an example of a high-profile GP turning to the secondary market to deliver liquidity to investors in an older fund. Other GPs that have run such deals include Providence Equity, Warburg Pincus and TPG.

The transaction involves TH Lee’s sixth fund, which closed on $8.1 billion in 2007, and will include assets valued at about $800 million to $900 million, sources said.

Fund VI has a total of about $3 billion of remaining net asset value, they said.

Assets in the deal, which are mostly privately held, will be acquired and transferred into a new vehicle with a five-year term, sources said. This will give TH Lee more time to manage them out, sources said.

Lazard is secondaries adviser on the transaction.

The deal is nearing finalization but is not yet at the point where existing Fund VI LPs can vote on it. That should come in 2019, sources said.

In this case, existing Fund VI LPs will have the option to cash out their interests in the fund at near par based on valuation as of September, sources said.

They can then decide to reinvest in the continuation fund being formed to house the strip of assets from Fund VI, sources said.

This is slightly different than past restructuring processes, which simply allowed LPs to either sell their stakes or roll their interests into the continuation vehicle.

With around $3 billion of remaining NAV, the pool still has a lot of investments for an older fund. The restructuring is one way to enable investors in the older fund to cash out while giving the GP more time to manage the investments.

Fund VI was generating a 7 percent net internal rate of return and a 1.4x multiple as of March 31, 2018, California Public Employees’ Retirement System performance data shows.

The firm closed its most recent pool, Fund VIII, on $3.59 billion this year. The firm is led by Co-Presidents Anthony DiNovi and Scott Sperling and Head of Private Equity Todd Abbrecht.

Action Item: Check out TH Lee’s Form ADV here: