Kohlberg breaks $2bn mark with Fund VIII final close

Kohlberg Investors VIII, which launched earlier this year with a $2bn target, closed on its $2.2bn hard-cap.

Mid-market firm Kohlberg & Company, launched in 1987 by KKR co-founder Jerome Kohlberg, has held a final close of its eighth buyout fund, Kohlberg Investors VIII, on its $2.2 billion hard-cap, according to a statement from the firm.

Kohlberg Investors VIII began fundraising earlier this year with a $2 billion target, and held a first close in August on $1.7 billion, as reported by Private Equity International . Kohlberg declined to comment beyond the press release.

A source familiar with the matter told PEI the first close in August occurred with commitments from mostly existing investors, and between then and the last close in December, the fund attracted capital from new investors.

The person added that there are 70 distinct investors in the fund.

According to PEI data, School Employees' Retirement System of Ohio committed $40 million to the fund, Public Employee Retirement System of Idaho $50 million, Teacher Retirement System of Texas $200 million and Teachers' Retirement System of Louisiana $75 million.

Kohlberg Investors VIII is the first fund raised by the firm to break the $2 billion threshold. Managing partner Sam Frieder and chief investment officer Gordon Woodward have been leading the firm during the last three of Kohlberg & Company's funds, including the latest Fund VIII.

The previous fund, Kohlberg Investors VII, closed on $1.6 billion in 2013, beating its $1.5 billion target. This seventh fund was Kohlberg & Company's first vehicle to break the billion-dollar mark. As of 31 December 2015, the seventh fund was generating a 16.7 percent net internal rate of return, as PEI had reported .

More than 20 percent of Fund VII's investor base comes from outside of the US – mainly in Europe and Asia, the firm had said at the time of the fund closing in 2013.

The source said Fund VII is about 85 percent invested, with at least one more platform investment and several add-on acquisitions in the pipeline.

Kohlberg & Company targets companies with an enterprise value of between $100 million and $750 million in the industrial, business services, healthcare services, financial services and consumer sectors, according to an annual report from Danish pension PKA AIP . It invests between $50 million and $300 million of equity per transaction.

Lazard was the latest fund's placement agent and Ropes & Gray its legal counsel. TransPacific Group also acted as placement for Asia. Neither Lazard, TransPacific Group nor Ropes & Gray were available to comment.