Investors

LPs jostle for position in L Catterton Fund VIII

The consumer-focused fund is bumping up against its $2.75bn hard cap and scaling back LP’s initial commitments.

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L Catterton is currently in discussion with limited partners about scaling back commitments to its over-subscribed eighth fund, which has yet to close, according to a person familiar with the matter. 
 
Fund VIII was launched earlier this year with a $2.5 billion target and held a first close in March on $100 million. The fund's hard cap is $2.75 billion.
 
Assuming it closes on its hard cap, Fund VIII will be the largest consumer growth-focused private equity fund raised since 2007, when European firm Lion Capital raised a little over €2 billion.
 
Among those making commitments to the L Catterton fund are Missouri Local Government Employees' Retirement System, which has committed $75 million, and the Commonwealth of Pennsylvania Public School Employees' Retirement System, which has committed $100 million. It is unclear whether these commitments will be pared back in light of excess demand.
 
The fund's $1.68 billion predecessor, Catterton Partners VII closed in 2013 and, as of September 2015, had a 1.3x multiple on invested capital and a 17.8 percent net IRR, according to the Pennsylvania Public School Employees Retirement System (PSERS), an investor in the fund. 
 
The strategy of fund VIII will echo its predecessor, pursuing control-oriented investments and providing between $50 million and $250 million of equity capital per transaction (or up to $500 million inclusive of co-investment) in mid-market companies in the consumer sector, primarily in North America, according to PSERS' notes.
 
In January 2016, Catterton entered into a strategic partnership with LVMH to merge with its private equity firm L Capital.
 
The firm closed its third growth fund, L Catterton Growth Partners III, on $615 million in February 2016, above its $500 million target. The venture capital and growth equity fund will invest in consumer and retail focused companies that require between $10 million and $50 million of capital, according to an earlier statement by the firm. 
  
L Catterton declined to comment on the fundraising.