Lindsay Goldberg to sell PAE after five-year hold

Lindsay Goldberg LLC, which just finished fundraising for its fourth pool, is exiting U.S. government contractor PAE after more than five years.

Platinum Equity
said Tuesday it agreed to buy PAE. Financial terms weren’t announced, but a sale was valued at close to $900 million, Reuters reported in December.

The sale comes after Lindsay Goldberg closed its fourth fund at $3.5 billion in December, two sources said.

Lindsay Goldberg was seeking $4 billion for Fund IV, Buyouts previously reported. The firm’s prior pool collected $4.7 billion in 2009.

Fund III produced an 8.7 percent net IRR and 1.2x investment multiple as of June 30, according to the California Public Employees’ Retirement System,an investor in the fund.

The sale

Platinum Equity’s purchase of PAE is expected to close at the end of February. Based in Arlington, Virginia, PAE provides contract services to U.S government agencies, international organizations and foreign governments. Lindsay Goldberg acquired PAE (previously known as Pacific Architects & Engineers Inc) in April 2011 from Lockheed Martin Corp. That deal was reportedly valued at $350 million.

PAE has tripled in size since then, a PAE spokeswoman said. No management changes are expected, the spokeswoman said.

In 2013, PAE took out a $400 million loan. It planned to use proceeds to refinance existing debt and fund a $170 million dividend, Moody’s Investors Service said. PAE later that year educed the distribution to $111 million, Moody’s said. It’s unclear if PAE paid out other dividends.

Under Lindsay Goldberg’s ownership, PAE acquired four companies. It bought A-T Solutions Corporate Holdings Prime Inc in June 2015; U.S. Investigations Services LLC, the business unit of Global Security and Solutions, in January 2015; CSC’s Applied Technology Division in July 2013; and Defense Support Services LLC in November 2011.

Houlihan Lokey and Morgan Stanley advised on the sale.

Executives for Lindsay Goldberg declined to comment.

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