Portfolio Advisors Recommends PSERS Invest $100MM into Trilantic Capital Partners V

Trilantic Capital Management LLC (“Trilantic” or “the Firm”) is seeking commitments of $2.0 billion for Trilantic Capital Partners V (North America), L.P. (“Fund V” or “the Fund”). Fund V will represent Trilantic’s first independent fundraise following the Firm’s spin-out from Lehman Brothers in early 2009. Trilantic’s prior fund was closed in 2007 with $1.9 billion of commitments. Trilantic Capital Partners, formerly Lehman Brothers Merchant Bank (“LBMB”), was purchased from the estate of Lehman Brothers and is led by Charlie Ayres. The ten person senior team that will be responsible for managing Fund V includes five Partners: Charlie Ayres, Danny James, Chris Manning, Jon Mattson and Charlie Moore. The five Partners are joined by five Principals. The entire senior team had worked together at LBMB.

Trilantic will continue to focus on making middle market private equity investments alongside proven management teams with a compelling business strategy and vision for a target company. Trilantic targets companies which exhibit a sustainable competitive advantage in their respective market and provide opportunities for long-term value creation through fundamental growth. The overall investment criteria will remain consistent with the prior two Trilantic funds by investing in middle market companies which have enterprise values between $100 million and $1.0 billion. As opposed to Fund IV Global, Fund V will only invest in opportunities based in North America. The Fund will make equity investments from $50 million to $200 million and is expected to generate a significant amount of co-investment opportunities for Limited Partners. Trilantic will make both control and non-control minority investments (20% to 49% of a company) that allow the team to have significant influence and access to the company.

Fund V is expected to primarily focus on the four following sectors where Trilantic has built up a significant amount of experience across the prior two Funds: Business Services, Consumer, Energy, and Financial Services. From the analysis below, the prior two Trilantic Fund’s have invested over 70% of the invested capital in the Consumer and Energy space. The four core sectors have made up over 90% of both the number of deals completed and dollars invested across the prior North American investments. While there is no set allocation, the Fund expects to complete 3 to 4 deals in each of the core focus sectors with each representing roughly 22.5% of the invested capital. The other 10% of the Fund will be opportunistically invested in non-core areas where the Fund is able to support a strong management team.

Portfolio Advisors’ recommendation is based upon the following analytical factors and is made within the context of PSERS’ investment guidelines.

  • Detailed due diligence, including interviews with industry peers, private equity professionals and CEOs of portfolio companies.
  • Evaluation of the composition of the investment team, how they work together, compensation structure and other factors that help determine whether a group is likely to be able to replicate past successes as currently configured.
  • Evaluation of the Fund’s proposed investment strategy within the context of the current investment environment.
  • The strategy proposed for the Fund is appropriate for the Private Equity Partnership component of the portfolio.

Based on the above, Portfolio Advisors recommends that PSERS commit to up to $100 million of limited partnership interests in Trilantic Capital Partners V (North America), L.P. Portfolio Advisors makes this recommendation considering the General Partner’s qualifications and PSERS’ overall investment guidelines.

This recommendation is given solely for the benefit of PSERS and cannot be relied upon by other investors considering an investment in the Fund, since their needs, objectives and circumstances may not be identical to those of PSERS. The scope of this recommendation is limited to the investment merits of the Fund. Portfolio Advisors does not provide legal or other non-investment-related advice.

Source: Portfolio Advisors, LLC