THL Whistling Dixie, Doubles Cash on Warner Music

(Reuters) – Thomas H Lee Partners will make a return of about two times its original $655 million investment on sale of Warner Music Group to Access Industries, a source familiar with the investment said on Friday.

Boston-based THL Partners was the largest private equity investor in the $2.6 billion buyout of Warner Music in 2004. The $655 million includes investments made by co-investors — limited partners which invested alongside THL.

The investment reaped THL and its co-investors about $775 million in a series of dividends paid during the life of the investment, the bulk of which were paid in the first year, the source said. THL and co-investors’ stake of about 56 million shares in Warner is worth about $460 million at Friday’s offer price of $8.25.

Limited partners in a private equity fund are typically pension or endowment fund investors. These investors are separate from Bain Capital and Providence Equity Partners, the other private equity investors which invested in Warner in 2004 alongside THL.

Billionaire Len Blavatnik’s Access Industries won the auction for Warner Music with an offer of $8.25 a share.