One Rock wraps up Fund II on nearly $1bn

The fund is more than twice the size of its predecessor, which relied heavily on co-investments.

One Rock Capital Partners held a first and final close on its second fund, One Rock Capital Partners II, on $964 million, the firm said on Monday.

The New York-based mid-market firm launched the fund in mid-January with a $700 million target and closed on its hard-cap on 31 March.

The second fund is more than twice the size of its predecessor. One Rock Capital Partners closed in 2012 on $431.50 million with commitments from limited partners including Teacher Retirement System of Texas, the Milken Family Foundation, Mitsubishi Corporation, HarbourVest Horizon and the New York State Common Retirement Fund, according to PEI data.

Fund II is targeting a 20 percent net internal rate of return and 2x multiple on investments, according to the Texas Municipal Retirement System (TMRS), which committed $50 million to the new fund at its February meeting.

Fund II's LPs include government and corporate pension plans, insurance companies, endowments and foundations, and high-net-worth-individuals, according to the statement.

Although the increase in fund size was a concern for TMRS, the pension plan noted that Fund I's deals have required more than $200 million of co-investment capital, suggesting that the growth in size for Fund II is not likely to result in a strategy shift.

One driver behind TMRS's commitment is the strong performance of the first vehicle, which it said has a track record in the top quartile, “with only one deal returning less than a 1.6x multiple”, and has a low loss ratio of just 8 percent. Fund I is still young and performance isn't fully relevant.

One Rock, which was founded in 2010 by former Ripplewood Holdings managing directors Tony Lee and Scott Spielvogel, focuses on investing in companies in the manufacturing, chemicals, industrial business services and auto retail sectors. The firm expects to make eight to 12 investments of $35 million to $100 million each out of Fund II, predominantly in North America.

One Rock has about $1.4 billion in assets under management. Moelis and Company and Mitsubishi Corporation Asset Management served as placement agents while Debevoise & Plimpton acted as legal counsel.