TH Lee targeting approximately $4bn

The Boston-based firm is targeting substantially less than the $10.1bn it raised for Fund VI and co-investments in 2007, though expects to deploy the next vehicle over a shorter period of time.

Thomas H. Lee Partners is targeting approximately $4 billion for its next vehicle, which the firm is expected to begin marketing this year, sources have told Private Equity International.

The firm expects to deploy around $4 billion over a four year period, one source said. 

Generally, private equity funds have five years to invest their capital, and then another five years or so to harvest those investments. However, the firm is aiming to deploy its next fund in roughly four years, and at an investment pace of about $1 billion a year, the roughly $4 billion target was appropriate, according to sources.

In a 24 January keynote at Private Equity International’s CFOs and COOs Forum, Thomas H. Lee co-president Scott Sperling indicated that the firm’s investment pace would influence its funds’ sizes in the future. “There’s a pace of investing that we’ve had for two funds. We’re determining the size of our fund [to reflect] that pace, and it’s smaller,” Sperling said.

Fund VII is considerably smaller than the firm's prior Fund VI, a 2006 vintage that closed on $8.1 billion with an additional $2 billion for co-investments. That fund was generating a 1.9 percent net internal rate of return and 1.08x investment multiple as of 30 June, according to the California Public Employees’ Retirement System. Fund V and Fund VI had been invested over seven-year periods. 

The firm still lists several of Fund VI’s early investments as portfolio companies on its website, including Spanish language media company Univision Communications, outdoor media and radio company Clear Channel Communications and outsourced processing provider Ceridian Corporation.

The firm declined to comment on this story.