Middle-market private equity firm Clearlake Capital Group has closed its fifth fund at more than $3.6 billion in investor commitments.
The investment vehicle, dubbed Clearlake Capital Partners Fund V, is the largest to date for the Santa Monica, California-based firm, which has now raised more than $7 billion from investors since the firm started in 2006. Fund V has more than 150 institutional investors from more than 25 countries in Asia, Europe, the Middle East, North America and South America, including corporate pension funds, sovereign wealth funds, insurance companies, foundations, endowments and family offices.
“We are thankful and humbled by the opportunity to prudently invest on behalf of our prominent and expanding base of global Limited Partners,” says José Feliciano, co-founder of Clearlake (pictured, right). “We believe that the interest in Fund V is an acknowledgment of Clearlake's superior track record and strategy. Clearlake brings deep industry knowledge and relationships, access to capital, and a flexible investment mandate to our partner management teams in our target sectors: industrials and energy, software and technology-enabled services, and consumer.”
Investors have been pouring their money into private equity, contributing to record-high average Ebitda multiples paid on deals in the space. The global private equity industry raised a record $453 billion from investors in 2017, according to market research firm Preqin. The amount raised in 2017 surpassed the previous landmark of $414 billion set 10 years earlier, in 2007.
Clearlake touts a proprietary approach to improving operations at the companies it invests in, and even has a registered trademark on its name for the approach: O.P.S. The firm describes the O.P.S. method as one that “generates creative solutions to operational challenges and offers resources and expertise that small- and medium-sized companies typically do not possess.”
“We are grateful that investors appreciate the strength of the Clearlake franchise in positively transforming businesses,” says Behdad Eghbali, Clearlake co-founder (pictured, left). “Clearlake creates value and provides patient, long-term capital to dynamic businesses that can benefit from our proprietary operational improvement approach, O.P.S. We believe Clearlake has the investment and operational skills to execute its strategy and generate superior returns at this scale.”
Fund V has already begun investing, and its signed or closed transactions so far include deals for Diligent Corp., Perforce Software, Janus International Group, ProVation Medical Inc. and Wheel Pros.
Clearlake made a minority investment in Diligent, a portfolio company of Insight Venture Partners that provides cloud-based enterprise governance management software to company boards of directors and senior management teams. The PE firm acquired Perforce, a technology development software company, from the Summit Partners PE firm.
Clearlake agreed to buy Janus, a supplier of doors and hallways systems for storage units, with plans to make it a platform company for acquisitions of other industrial and building products businesses.
The PE firm acquired ProVation, medical software company, from Wolters Kluwer, a software and professional services provider, with a similar plan: to build on ProVation as a platform company through both acquisitions and organic growth.
For Fund V, Credit Suisse Securities was the advisor and placement agent, with Simpson Thacher & Bartlett serving as the fund’s legal advisor.