The lower mid-market specialist had raised $286 million for the fund as of August, well ahead of its $200 million target but still short of its $300 million hard-cap. The vehicle will include a GP commitment of 5 percent or up to $12.5 million, according to the documents.
The fund will have a 2 percent management fee during and after the investment period. Carried interest is set at 20 percent, with a preferred return of 8 percent, according to pension documents.
High Road’s debut fund, a 2007 vintage, closed on $153 million in 2009 and was generating a net internal rate of return of 17.1 percent as of 30 June, according to pension documents. The firm has completed two exits from this fund, including healthcare services company Accentus and industrial gear manufacturer Milwaukee Gear Company. High Road’s current portfolio consists of nine businesses, including food and beverage company PANOS brand and electrical parts and components company All Current Electrical.
Founded in 2006 by Robert Fitzsimmons, a former managing partner at The Riverside Company, High Road seeks lower- to mid-market investments in North American companies with revenues of less than $100 million. For Fund II, High Road plans to acquire equity positions between $6 million and $30 million per investment over a five year period, according to the documents.
The Fire and Police Pension Association of Colorado has also committed to Fund II, according to Private Equity International’s Research and Analytics division.
LACERS’ private equity consultant Hamilton Lane recommended that the pension commit to the fund, citing High Road’s “historical track record” and “experienced, well staffed and cohesive investment team”, according to the documents.
The $12 billion California pension system is considering a new strategic plan that could involve committing up to $350 million to private equity each year. Hamilton Lane has previously suggested LACERS reduce investments to mega-funds and commit to more distressed debt vehicles.
However, San Francisco-based Hamilton Lane might not be the system’s private equity consultant for much longer. In February LACERS launched a search for a new consultant, and last month narrowed down the search to two finalists: Hamilton Lane and Portfolio Advisors. The two consultants will interview with the retirement system’s board this fall.