The Los Angeles City Employees’ Retirement System has committed $20 million to Hellman & Friedman’s seventh fund, which is targeting $7 billion, with a hard cap of $10 billion.
LACERS has invested a total of $31 million with Hellman & Friedman, with $11 million going to the firm’s $3.5 billion fifth fund, which closed in 2004, and $20 million going to H&F VI, which closed on $8 billion in 2007.
H&F VII will target mid-market to large-cap buyout opportunities across a range of industries, including financial services, media, software/data services, business services, healthcare, internet/digital media and energy/industrials.
Hellman & Friedman will look for investments in the US and Western Europe with a small percentage going to Eastern Europe. The firm will look to build a portfolio of 12 to 15 companies with equity investments ranging from $300 million to $1.5 billion. Hellman & Friedman will contribute $400 million of the committed capital.
Management fees on the new fund will be 1.5 percent of committed capital during the six year investment period, and .75 percent of invested capital in the post-investment period. Carried interest is set at 20 percent.
This year, the firm anticipates that Warren Hellman will step down as chairman of the firm, to be replaced Brian Powers. Philip Hammarskjöld will become chief executive officer and Patrick Healy will become deputy chief financial officer, according to LACERS documents.
Hellman & Friedman was founded in 1987 by Warren Hellman and Tully Friedman and raised $327 million for its first fund. Hellman had served as a partner and head of investment banking at Lehman Brothers prior to founding the firm.
LACERS in April enacted rules governing the disclosure of placement agents used by investment firms looking for commitments. LACERS set the rules in place in the wake of a growing pension pay-to-play scandal involving the New York State Common Retirement Fund, in which former operators strong-armed investment firms to pay sham finder’s fees in exchange for commitments from the pension.
Hellman & Friedman does not use placement agents, according to the LACERS documents.