Lightyear Fund IV inches closer to target

The mid-market financial services specialist has raised nearly $900m.

Lightyear Capital, a mid-market firm that invests in financial services companies in North America, is nearing its target for its Lightyear Fund IV as it closed on almost $900 million, according to a regulatory filing with the Securities and Exchange Commission.

The filing shows that Lightyear has gathered $771 million as of Friday and also indicates that including $23 million raised outside of the offering and a related co-investment fund, the total amount raised was $846 million.

The fund initially targeted about $950 million with a $1.25 billion hard-cap, according to a source familiar with the fundraising. It held a first close on $350 million about a year ago. Lightyear Capital declined to comment.

Limited partners in the fund include the New Mexico State Investment Council, which committed $75 million in March, and the Los Angeles Fire and Police Pension System, which committed $25 million.

The fund will seek to invest in 10 to 12 portfolio companies in financial services, according to minutes from the New Mexico Educational Retirement Board's investment committee, which committed $50 million at its July meeting.

Lightyear Fund III closed on $954 million in 2012, above its $800 million target but below its $1.1 billion hard-cap. That fund delivered a 20 percent net internal rate of return and a 1.5X multiple, according to NMERB's July minutes, which also showed that Lightyear is providing a 3 percent GP commitment to the latest fund.

New York-based Lightyear acquired AIG Advisory Group in 2016 in a co-investment with Canadian pension plan PSP Investments and in December it invested $95 million in Ygrene Energy Fund, a provider of residential multifamily and commercial property assessed clean energy financing.