WL Ross & Co. works with Lazard on liquidity process for $4 bln Fund IV

  • WL Ross & Co. explores liquidity options in older fund
  • Firm ponders options for its future
  • Founder Wilbur Ross named Commerce Secretary in Feb.

WL Ross & Co., whose eponymous founder Wilbur Ross, left the firm to serve as U.S. commerce secretary, has been exploring options for its future.

The firm, which has talked about launching its sixth flagship fund with limited partners, hired Lazard to work on a restructuring or other liquidity options for its fourth fund last year, according to three people with knowledge of the firm.

Fund IV closed on about $4 billion in 2008. That fund was generating an 8 percent net internal rate of return and a 1.4x multiple as of June 30, 2016, performance information from California Public Employees’ Retirement System shows.

There is also talk of a potential spinout from parent Invesco, according to one source, though it’s unclear how far along those plans may be.

The restructuring process has been going on since last year and it’s not clear if a final agreement has been ironed out with LPs.

Jeaneen Terrio, a spokeswoman for Invesco, and Judi Mackey, a spokeswoman for Lazard, declined comment.

WL Ross has talked to LPs about Fund VI since 2014, Bloomberg reported. An LP familiar with the firm said fundraising would be challenging without Wilbur Ross involved. “[We] would look at it as a weakness versus [the] last fund,” the LP said of Ross’s departure.

The firm had trouble hitting its $4 billion target in Fund V, which eventually closed in 2012 on $2.2 billion. That total included $640 million from external investors and the balance in separate accounts and committed co-investments.

Wilbur Ross formed WL Ross in 2000. He sold the firm to Invesco in 2006 while retaining a leadership role. In 2014, WL Ross & Co. named Stephen Toy and Greg Stoeckle co-heads with day-to-day control, with Ross staying on as chairman and chief strategy officer.

Ross, 79, was named commerce secretary in President Donald Trump’s administration on Feb. 27. As such, he left the firm and has been unwinding his holdings. “We have been planning for this eventuality for some time and are working to ensure the smoothest possible transition for the business,” Terrio told Buyouts earlier this year.

Action Item: Read WL Ross & Co.’s Form ADV here: http://bit.ly/2nxdnHL

U.S. Commerce Secretary Wilbur Ross holds a news conference at the Department of Commerce in Washington on March 10, 2017. Photo courtesy Reuters/Eric Thayer