New Mountain Capital, an alternative asset manager, is aiming to raise $5 billion for its fifth buyout fund, according to documents presented to the Pennsylvania Public School Employees’ Retirement System by advisor Portfolio Advisors.
New Mountain Partners V, which has a $5.85 billion hard-cap, will focus on North American mid-market investments, with average investments of $300 million.
The New York-headquartered firm is pursuing defensive growth industries with high barriers to entry for its investments. This means “sectors that can succeed in both robust and weak economic environments”, but sizeable enough and growing to achieve high valuations and outsized returns at exit, Portfolio Advisors tells PSERS in its recommendation letter.
New Mountain will typically invest in four or five companies a year.
PSERS plans to make a $200 million commitment to the fund. It received approval from the PSERS Internal Alpha Committee on 19 May.
The predecessor fund, New Mountain Partners IV, held a final close on $4.1 billion in October 2014. Investors in Fund IV include PSERS, Canada Pension Plan Investment Board, AP Fonden 3, and Teachers’ Retirement System of the State of Illinois.
Fund IV was the best returning fund of PSERS’ New Mountain commitments, returning 23.8 percent investor rate of return, according to the Portfolio Advisors documents, which revealed the performance details of New Mountain’s previous funds, as of 31 December.
PSERS has committed to all four of New Mountain’s previous funds, with its last commitment being $100 million to Fund IV.
According to the materials, New Mountain Partners III closed on $5.12 billion in 2007 and returned a 12.8 percent internal rate of return and a 1.77x multiple on cost.
New Mountain manages almost $11 billion in private equity capital across three active funds and is also active in public equity and credit, according to its website.
The firm did not return a request for comment.