RLH returns with $500 mln Fund IV target

  • Fund to be near a third larger than Fund III at target
  • Previous RLH funds netting 16.2 pct IRR in aggregate
  • Firm specialty: healthcare, government and business services

Riordan, Lewis & Haden Equity Partners set a $500 million target for its latest middle-market buyout fund.

The firm will charge fund investors a 2 percent management fee on committed capital through the vehicle’s six-year investment period, an investment memo released by Rhode Island Office of the General Treasurer shows. The fee falls to 2 percent of invested capital thereafter.

Director fees, breakup fees and all monitoring, commitment, acquisition, transaction, advisory, consulting and other similar fees will fully offset LP management fees.

The Los Angeles firm, popularly known as RLH Equity Partners, will commit at least $20 million to the new fund. The fund must return 8 percent before the firm and its partners can start collecting carried interest.

At its $500 million target, RLH Investors IV will be roughly 32 percent larger than the firm’s previous fund, which held a final close on its $380 million hard cap in 2013. Taken together, RLH’s three previous flagship funds had distributed 1.3x its LPs’ capital, netting a 16.2 percent IRR since inception, according to the memo.

RLH plans to deploy $20 million to $40 million per deal in around 12 portfolio companies of up to $150 million, the memo says. RLH typically makes control investments, though as much as a quarter of its portfolio may be minority positions in companies where governance rights are adequate.

RLH invests in business services, healthcare, and government services. In November, the firm invested in Utegration, a consulting firm for the utilities industry.

The firm did not respond to a request for comment.

Action Item: More about RLH: www.rlhequity.com/

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