Lightyear sets Fund IV hard cap at $1.25 bln

  • 32 pct increase from Fund III’s $950 mln close
  • Fund IV to invest in mid-market financial-services businesses
  • Lightyear acquired AIG subsidiary in January

Lightyear Capital set a $1.25 billion hard cap for its latest flagship buyout fund, a source with knowledge of the fund told Buyouts.

Lightyear Fund IV’s hard cap represents a 32 percent increase from the $950 million Lightyear raised through its previous fund. Fund III closed on its hard cap after surpassing its $800 million target, according to a 2012 fund close announcement.

Fund IV’s regular target is not clear. The firm declined to comment.

The New Mexico Educational Retirement Board committed $40 million to Lightyear III in 2011. The commitment netted an 18.3 percent internal rate of return through June 30, according to New Mexico ERB documents.

As with its previous funds, Lightyear will invest Fund IV in U.S. middle-market companies operating in the financial-services industry, according to New Mexico State Investment Council meeting materials. Fund IV investment targets could include asset-management firms, banks and brokerage houses, as well as financial-technology, insurance and specialty-finance businesses.

In January, the firm partnered with the Public Sector Pension Investment Board to acquire AIG Advisor Group, a financial-advisory subsidiary of insurance giant American International Group. Lightyear also sold real-estate-investment firm Clarion Partners Holdings LLC to global asset manager Legg Mason Inc in January.

New Mexico State Investment Council will consider a $75 million re-up to Fund IV at its March 22 meeting, according to its agenda. The investment council allocated $100 million across two of its previous funds.

Former PaineWebber Chairman and CEO Donald Marron founded Lightyear Capital in 2000. The firm has raised $2.5 billion since its inception. Lightyear is based in New York City.

Action Item: For New Mexico State Investment Council’s reports on Lightyear, check out its March 22 meeting materials here

Photo courtesy of Reuters