GTCR in five charts

Following the close of the Chicago-based firm’s largest-ever fund on $5.25bn, Private Equity International takes a look at GTCR’s performance and strategy.

Last week, Chicago-based mid-market and growth firm GTCR announced the final close on its 12th buyout fund with $5.25 billion of LP capital commitments.

The fund, which launched in May, had an initial target of $4.5 billion and was “quickly oversubscribed”, the firm said in a statement.

“This is the largest fund in the firm’s 37-year history,” managing director Craig Bondy said in the statement. “With a larger, more experienced investment team in place, we have the organszational capacity to pursue more and potentially larger-scale investment opportunities.”

More than 85 percent of commitments to Fund XII came from existing investors, most of whom increased the size of their commitment versus prior funds, GTCR managing director David Donnini said.

Investors in the fund include Louisiana State Employees Retirement System, Maine Public Employees Retirement System, Massachusetts Pension Reserves Investment Management Board, Ohio Police & Fire Pension Fund and Pennsylvania State Employees’ Retirement System, according to PEI data.

Documents prepared by StepStone for Texas Municipal Retirement System‘s 17 and 18 August meetings revealed that, like previous GTCR funds, Fund XII does not have a preferred return hurdle.

“Keeping with the terms of prior GTCR funds, Fund XII will not have a preferred return hurdle,” the document read. “However, the lowest net IRR generated by a GTCR fund since 2000 was 14 percent and the fund has a 1.25 minimum valuation hurdle.”

StepStone – which recommended TMRS make a $75 million commitment to the vehicle – said the fund “is not expected to raise in excess of $5.0 billion”.

GTCR Fund XII ranked 100 out of 100 in the Texas pension’s manager search process, which rates several aspects of the firm and the fund, including its team, investment philosophy, performance and terms.

Founded in 1980, GTCR focuses on North American-based companies in the following sectors: technology, media and telecom, financial services and technology, healthcare and growth business services.

“The firm’s longstanding relationships and deep industry knowledge through its ‘leaders strategy’, has enabled GTCR to source proprietary and unique investment opportunities,” StepStone wrote in the document.

The document pointed to GTCR’s buy-and-build strategy as a mitigant for increasing purchase price multiples.

Since 1980, GTCR has invested more than $14 billion in more than 200 companies, the firm said. Here are five charts that illustrate the firm’s makeup and strategy.