Goldman Sachs buys minority stake in Littlejohn

Goldman’s Petershill Fund II purchased less than 10% in Littlejohn, the first investment out of that fund.

Goldman Sachs Alternative Investments & Manager Selection (AIMS) Group has made a minority investment in Greenwich-based private equity firm Littlejohn & Co, through its Petershill Fund II, a Goldman spokesman told Private Equity International.

Goldman’s AIMS Petershill Fund II purchased a passive, non-voting, primary interest in the private equity general partner that represents less than 10 percent, according to a Wednesday statement. Terms of the transaction were undisclosed.

The two firms have had a close relationship for 17 years, as Goldman has been a limited partner in all of Littlejohn’s private equity funds.

This is Goldman Sachs’s first minority investment in a private equity partner, the spokesman said. In the past, Petershill Fund I focused on acquiring stakes in hedge fund managers only.

Goldman’s Petershill investment programme launched almost a decade ago to help fund alternative investment managers’ strategic development by making minority investments in them. Petershill capital typically supports fund managers in employee retention, business development, and buying out legacy stakeholders.

Goldman closed Petershill Fund II on $1.5 billion in November, as reported by  PEI.

According to the statement, Littlejohn, which manages more than $4 billion in assets, will use the proceeds to support growth in private equity, special situations and performing credit strategies.

This transaction follows Dyal Capital Partners’ minority investment in HIG Capital earlier this month. Dyal, a permanent-capital vehicle of Neuberger Berman, took a less than 15 percent stake in HIG, which was valued around $4.5 billion for the deal, as reported byPEI. Dyal also acquired a 10 percent passive, non-voting minority stake in Silver Lake in July, as reported byPEI.

Littlejohn is currently investing Littlejohn Fund V, which raised $2 billion in 2014, surpassing its $1.5 billion target, according to PEI data. It held a final close on the hard-cap in July 2014. Investors in that fund include the California State Teachers’ Retirement System (CalSTRS), which committed $75 million; Canada Pension Plan Investment Board, which committed $100 million; the Oregon State Treasury, which committed $150 million; and the Maryland State Retirement and Pension System, which committed $75 million, according to PEI data.

An earlier fund, Littlejohn Fund IV, was generating a 13.5 percent internal rate of return, as of 30 September, according to documents from the Oregon Public Employees Retirement Fund.

Earlier this year, Littlejohn received a $200 million commitment from the Virginia Retirement System for the pension fund’s separate account with the firm.

Littlejohn received financial advising from Barclays and legal advising from Debevoise & Plimpton in the Goldman Sachs transaction.

A Littlejohn spokesman declined to comment beyond the statement.