GIC, BlackRock, Lexington join Kohlberg & Co’s US$1.1B continuation vehicle

U.S. five dollar currency notes bills; taken September 2018.U.S. five dollar currency notes bills; taken September 2018.

Kohlberg & Co. has closed a US$1.1 billion Continuation Vehicle deal, co-led by affiliates of BlackRock, GIC and Lexington Partners, to take over the remaining assets of Kohlberg Investors VII, a 2012 fund which had US$1.6 billion in capital commitments, the private equity firm said in a press release Tuesday.

The Continuation Vehicle will allow Fund VII’s limited partners to exit while supporting the growth of four investments, the statement said.

Under the deal, the BlackRock, GIC and Lexington Partners affiliates will contribute their pro-rata share of additional capital to support and enhance the remaining assets, while existing Fund VII limited partners had the options of exiting, rolling over or re-investing, the statement said.

Choo Yong Cheen, chief investment officer for private equity at GIC, said in the statement: “GIC is pleased to work with our partners at Kohlberg, BlackRock, and Lexington to provide a fair and transparent option to existing Fund VII Limited Partners. As a long-term investor, we believe in building solutions that allow leading private equity managers to create lasting value in their companies. We look forward to supporting Kohlberg in maximizing the value of this portfolio of businesses.”

John Rudge, a partner at Lexington Partners, added: “We believe secondary transactions are an increasingly important portfolio management tool for investors in private equity, and Lexington is pleased to co-lead Kohlberg’s first continuation vehicle.”

The statement didn’t provide details of the investments which would be carried over to the new fund.

Fund VII’s investments had included addiction treatment provider Sunspire Health, according to a 2015 media report, and international specialty lines insurance underwriter U.S. Risk Insurance Group, according to a 2016 media report. In 2013, the fund acquired a majority of insurance brokerage Risk Strategies. The fund also acquired PPC Industries in 2014 and Steinway Musical Instruments in 2013. In 2016, the fund acquired a majority of medical device maker Amendia.

In 2019, the fund sold Sabre Industries to The Jordan Co., and in the same year, reportedly sold Osmose Utilities Services to EQT Infrastructure.

GIC, which manages Singapore’s foreign reserves, has around US$453.2 billion under management, according to data from the Sovereign Wealth Fund Institute.

New York-based Kohlberg & Co. has raised US$12 billion in capital since its 1987 inception.

BlackRock Alternative Investors manages US$283 billion in alternative investments and commitments on behalf of clients, as of end-June.

Lexington Partners is a global alternative investment manager, mainly providing liquidity services to owners of private equity and other alternative investments; it also makes co-investments with leading private equity sponsors. The manager has US$55 billion in committed capital since inception.