Birch Hill closes Fund IV on C$1bn

The Toronto-based mid-market firm beat its C$850m target and received commitments from a large group of international limited partners, says partner Steve Dent.

Canadian mid-market firm Birch Hill Equity Partners has closed its fourth fund on C$1 billion (€775 million; $1.05 billion), surpassing its C$850 million target by more than 20 percent.

Birch Hill launched the fund in the second half of 2009 and received commitments from a large group of new and existing limited partners. The firm expects to make investments of between $30 million and $500 million in 12 to 14 companies in a variety of sectors. Shannon Advisors acted as the fund’s placement agent.

“We were certainly talking to a lot of new people this time that we hadn’t talked to in previous fundraising,” Birch Hill partner Steve Dent told PEI. Roughly 65 percent of limited partners in the fund are non-Canadian institutions, a significant increase in foreign LPs compared to Birch Hill’s previous fund, roughly 65 percent of which were Canadian institutions, Dent said. The majority of new limited partners in Fund IV are non-Canadian, he added.

Steve Dent

Birch Hill’s third fund closed on $850 million in 2006. As of 30 June 2010, the fund was generating a 9.4 percent internal rate of return and a 1.30x investment multiple, according to performance data from the California Public Employees’ Retirement System.

Last month, Birch Hill exited Canadian telecommunications company Atria Networks, which it acquired in 2006, and Canadian home healthcare provider Comcare Health Services.

Birch Hill spun out of the private equity wing of TD Bank Financial Group in 1994, and has roughly C$2 billion in capital under management.