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Leonard Green to boost equity checks in largest fund yet

  • Firm takes aim at $900 mln-$1 bln equity checks
  • LA-based GP adds mostly overseas LPs
  • ExamWorks take-private seen as deal template

Leonard Green & Partners’ quickly raised $9.6 billion Green Equity Investors VII LP fund will have more range to pursue larger deals, according to a source.

Instead of doing more deals of the same size as GEI VI, Leonard Green’s check sizes in GEI VII will range as high as the $900 million to $1 billion level, with co-investments from LPs available for even larger deals. The firm hasn’t yet tapped capital from the new fund.

After formally launching its fundraising effort in December, the buyout shop officially closed GEI VII on June 6 at its hard cap of $9.1 billion in third-­party commitments, plus $500 million from principals at the firm, in about seven months.

That’s $3.35 billion more than its predecessor fund, GEI VI, which closed in 2012 with committed capital of $6.25 billion. The firm doubled its $250 million commitment from GEI VI.

The firm raised the target on Fund VII from $7.5 billion to $8.5 billion in January, Buyouts previously reported.

Leonard Green’s $2.2 billion take-private of ExamWorks Group Inc, disclosed in April, could serve as a template for future transactions, the source said.

The purchase price of $35.05 a share for the provider of independent pricing data for medical claims amounted to a 20 percent discount to the stock’s 12-month high of about $44 a share.

For GEI VII, the firm took in money from existing limited partners, but it widened its base mostly by adding overseas LPs. Investors from outside the U.S. comprised about half of GEI VII, a larger portion of foreign LPs than its predecessor fund.

Founded in 1989, Leonard Green eyes deals in six key areas: consumer and business services, consumer products, distribution, financial, healthcare and retail.

Green Equity Investors V, the firm’s vintage 2007 fund, rang up an IRR of 18.6 percent as of June 30, 2015, for Los Angeles City Employees’ Retirement System, according to the pension system’s data.

GEI VI, the firm’s vintage 2012 fund, generated an IRR of negative 1 percent as of the same date.

Action Item: Leonard Green & Co,

John Danhakl, managing partner at Leonard Green, takes part in the Private Equity: Rebalancing Risk session during the 2014 Milken Institute Global Conference in Beverly Hills, California, on April 29, 2014.  Reuters/Kevork Djansezian