GTCR targets $4.5bn for Fund XII

The vehicle, which has a $5bn hard-cap, comes without a hurdle rate, but nearly all GTCR’s funds rank in the top first or second quartiles.

GTCR is raising its 12th fund, GTCR Fund XII, which will have no preferred rate of return, in line with predecessor vehicles, according to a recent pension plan document.

The Chicago-based mid-market and growth firm is targeting to raise $4.5 billion with a $5 billion hard-cap, according to a document prepared for Texas Municipal Retirement System's 17 and 18 August meetings.

“Keeping with the terms of prior GTCR funds, Fund XII will not have a preferred return hurdle,” according to the document prepared by the StepStone Group for TMRS, which included an investment recommendation for the pension plan to commit $75 million to GTCR's latest fund.

“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.”
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.

“Despite significant demand from LPs, Fund XII has a target of $4.5 billion, which is only 17 percent larger than Fund XI and only 40 percent larger than Fund X.” 

GTCR's latest fund, GTCR Fund XI, closed in 2014 on $3.85 billion, above its $3.25 billion target, according to PEI data. Investors in that fund included the Iowa Public Employees' Retirement System, Massachusetts Pension Reserves Investment Management Board, Washington State Investment Board, and HarbourVest Partners.

Including Fund XII, Massachusetts PRIM has committed to 10 GTCR funds. It recently approved a commitment of $200 million to GTCR Fund XII, noting in its meeting documents that “nearly all GTCR's funds are in the top first or second quarters in private equity industry peer performance rankings”.

Performance of GTCR past funds:

Fund  Initial Investment Date  Net IRR %  Value Multiple 
GTCR Fund VIII  2003  22.28 

1.7X 

GTCR Fund IX  2006  13.59 

1.8X 

GTCR Fund X  2011  23.04  1.9X 
GTCR Fund XI  2014  14.84  1.2 

Source: Washington State Investment Board, as of 31 December