Clearlake rakes in $1.4bn for latest special situations fund

The vehicle is the most recent in a steady stream of distressed debt products to hold closes on more than $1bn in the past week.

Clearlake Capital Group has hit the hard-cap on its latest distressed product.

The Santa Monica-based firm held a final close on more than $1.4 billion for its oversubscribed Clearlake Opportunities Partners II, surpassing its $1 billion target.

The fund will lend to mid-market companies in the firm’s core industries, which include software and technology-enabled services, industrials and energy, and consumer. Technology investments made up 64 percent of Fund I’s deployment, according to meeting documents from the Connecticut Retirement Plans and Trust Fund. The fund is targeting a 15 percent net internal rate of return.

The vehicle will target companies with an enterprise value between $200 million and $2 billion, the documents outlined. The firm plans to have 20-25 core investments in the fund’s portfolio, sized between $25 million and $75 million, as previously reported by Private Debt Investor.

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 unrealised portfolio, according to the Connecticut meeting documents. The vehicle has an 8 percent hurdle rate with 20 percent carried interest and a 100 percent catch-up.

The fund received capital from more than 40 different institutional investors including pension funds, sovereign wealth funds, insurance companies, endowments and family offices. It received commitments from the Alaska Permanent Fund ($75 million), the Illinois Municipal Retirement Fund ($75 million), the Pennsylvania Public School Employees’ Retirement System ($100 million), the Rhode Island State Treasury ($30 million) and the Pennsylvania State Employees’ Retirement System ($75 million), among others.

Fund I closed in 2016 on more than $600 million in capital commitments.

The firm was unable to be reached for comment by press time.

Distressed fundraising is having a standout quarter. Clearlake joins the likes of Ares Management, CVC Credit Partners, Bayside Capital and Cheyne Capital Management in holding closes on distressed funds within the last two weeks. The firms have collectively closed on more than $6 billion across their respective funds. The strategy has collected more than $35 billion so far this year, according to PDI data.

Clearlake is a private investment firm founded in 2006 that operates both credit and equity strategies. It has more than $10 billion in assets under management.