ABRY Partners expects to hold a first and final close on its latest senior debt fund in mid to late April, according to documents released to Private Debt Investor by the Los Angeles County Employees’ Retirement Association (LACERA). The expected timing of the eventual close was confirmed by a second limited partner.
LACERA’s board approved a $100 million commitment to ABRY Advanced Securities Fund III at its meeting last week, chief investment officer David Kushner told Private Debt Investor in an email.
The fund has a $1.5 billion target and will invest in senior debt securities issued by non-investment grade companies in the media, communications, information and business services sectors. The debt portion will typically fall within the top 40 percent of the capital structure, according to LACERA documents.
“The … strategy appears to be a virtually riskless strategy that locks in profits of 300-400 basis points per transaction levered 5-6x to generate consistent annual net returns in excess of 18 percent to limited partners,” according to a LACERA investment staff memo included in the board’s meeting materials. “A rational perspective is that either other firms will duplicate the strategy driving down profits or that there are unforeseen risks.”
The General Partner will commit at least $48 million to the fund. LACERA secured a 9 percent preferred return, 2 percent management fee and 100 percent fee offset in its commitment.
ABRY’s $1.2 billion Advanced Securities Fund II – a 2011 vintage – was generating a 1.3x total value multiple as of 30 September, according to Maine Public Employees Retirement System documents. LACERA documents peg the Advanced Securities as having netted a 19.3 percent internal rate of return since the strategy’s inception.
Fund III will be managed by the same senior management team as previous ABRY Advanced Securities Funds. The firm had not responded to a request for comment at press time.