Searchlight to hold first close for third fund

Sofia Karadima
05 April 2019

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Searchlight Capital is expecting to hold a first close for Searchlight Capital III in April, according to documents seen by Unquote.

The fund has a $2.75bn target size, and is expected to hold a final close by mid-2019. It has a hard-cap of $3.25bn.

Searchlight Capital III is a private equity fund with a focus on special situations investments in western Europe and North America.

The vehicle represents a significant increase on its predecessor Searchlight Capital II, which held a final close on $1.9bn in December 2015 and was 53% deployed by June 2018, according to Unquote Data.

Searchlight II is currently reporting a net IRR of 28.6% and 1.49x money multiple, and the new fund will target returns of 20-30% IRR and 2-3x MOIC, according to a document.

The GP has employed Credit Suisse as a placement agent for LPs outside of the US.

Investors
Washington State Investment Board is considering committing up to $200m in the fund, with the pension fund's investment consultant Hamilton Lane also recommending an investment of up to $200m.

Other pension funds with commitments to Searchlight Capital III include Texas Municipal Retirement System and Pennsylvania Public School Employees' Retirement System.

Investments
Searchlight Capital III targets middle-market companies within the consumer, communication services, information technology and industrial sectors.

The fund is going to target 15 investments, ranging from $100m to $200m. Three to four investments will take place per year, where the anticipated hold period per investment would be five years.

Searchlight Capital III is expected to pursue several transaction types including distressed debt purchases, post-reorganisation equity purchases, bankruptcy reorganisations followed by debt-for-equity swaps, minority private equity investments, leveraged buyouts, corporate partnerships, public equity purchases, and subordinated debt instruments with equity optionality.

It will invest in both European and North American companies.

People
Searchlight Capital - Oliver Haarmann (founding partner).