Clearlake eyes final close for its latest special situations fund

Clearlake Opportunities Partners Fund II is targeting $1bn, double its $500m target from Fund I.

Clearlake Capital Group is nearing the final close for its latest opportunistic credit fund.

The Santa Monica, California-based firm said it was expecting to hold a final close on its Clearlake Opportunities Partners II during May, or by the end of the second quarter, according to 8 May meeting documents from the Connecticut Retirement Plans and Trust Fund.

The fund is targeting $1 billion, double its $500 million Fund I goal, and has no hard-cap, the documents outlined. The vehicle will look to target mainly special situations and some distressed investments. More specifically, it will focus on companies that are strong fundamentally and need capital because of financial constraints, rather than restructurings. The fund will take structured equity positions as well.

The firm declined to comment.

The vehicle will target mid-market companies that have an enterprise value between $200 million and $2 billion. The firm plans to have 20-25 core investments in the fund’s portfolio, sized between $25 million and $75 million, in addition to other debt and equity investments that could be smaller in size.

The fund, which is targeting a 15 percent net internal rate of return, will focus on Clearlake’s main investment sectors, which include industrials and energy, software and technology and consumer businesses. Technology investments made up 64 percent of Fund I’s deployment.

Fund II will charge a management fee of 1 percent on committed capital during the first 18 months of the investment period and then 1.5 percent on the cost basis of the unrealized portfolio. The vehicle has an 8 percent hurdle rate with a 20 percent carried interest and a 100 percent catch-up.

The Connecticut Retirement Plans and Trust Fund is considering a $75 million commitment to the vehicle. The Illinois Municipal Retirement Fund committed $75 million, Pennsylvania Public School Employees’ Retirement System committed $100 million and the Pennsylvania State Employees’ Retirement System committed $75 million.

In March 2018, Clearlake closed the latest vintage of its flagship fund, the $3.6 billion Clearlake Capital Partners V, which will invest in 14-18 companies and aim to generate gross returns in excess of 25 percent, as PDI previously reported.

Clearlake sold a minority stake to a trio of firms in May of last year including Neuberger Berman’s Dyal Capital Partners, Goldman Sachs’ Petershill programme and Landmark Partners. The trio share roughly a 20 percent stake, the source said.

Clearlake Capital Group is a private investment firm founded in 2006. It has approximately $9 billion in assets under management.