Birch Hill targets C$850m for Fund IV

The Toronto-based firm has approached the California Public Employees' Retirement System for a commitment.

Canadian private equity firm Birch Hill Equity Partners is targeting C$850 million (€639 million; $815 million) for its fourth fund.

The $207 billion California Public Employees' Retirement System disclosed information about the fund in meeting documents this week. CalPERS did not disclose the size of the requested commitment, but included the fund on a placement agent fee disclosure chart under “proposed new investment”. Birch Hill is using Shannon Advisors as a placement agent.

A spokesperson for CalPERS said the classification “proposed new investment” does not mean the pension is considering investing in the manager, but only that the pension has received a request for a commitment.

CalPERS committed about $125 million to the firm’s third fund in 2005. With about $115 million called, the fund was generating a 10.2 percent internal rate of return and a 1.20x investment multiple, according to CalPERS performance numbers from the end of 2009.

According to various media reports, Birch Hill entered fundraising last year.

Birch Hill focuses investments in the mid-market, looking for companies valued between C$30 million and C$400 million. In 2008, Birch Hill, along with OMERS Capital Partners, bought cartoon properties Strawberry Shortcake and Care Bears from greeting card giant American Greetings.

Also in 2008, the firm partnered with Westerkirk Capital to acquire mattress retailers Sleep Country Canada for C$356 million. The firms agreed to pay C$22 per share to de-list the company.

Birch Hill spun out of the private equity wing of TD Bank Financial Group in 1994, and manages roughly C$1.7 billion.