Landmark increases investment in Clearlake

Landmark had used a preferred equity structure to finance a deal last year involving Reservoir Capital Partners.

Landmark Partners has upped its investment in Clearlake Capital Group as part of a deal with Neuberger Berman and Goldman Sachs, one year after Secondaries Investor reported the secondaries firm had struck a preferred equity deal with the firm.

Neuberger’s Dyal Capital Partners unit and Goldman’s Petershill programme made a minority investment in Clearlake, according to a statement released on Tuesday. The two firms split the equity cheque 50-50, a source familiar with the matter told sister publication Private Debt Investor.

The two investors, which are focused on acquiring minority stakes in alternative asset managers, made an undisclosed non-voting investment in Santa Monica based Clearlake, which specialises in the software and technology; energy and industrials; and food and consumer services sectors.

Clearlake plans to seed a debt vehicle focused on financially sound companies with capital from this deal, according to the source.

Landmark, an existing partner in Clearlake, together with Dyal and Petershill now share a roughly 20 percent stake in the firm, the source added. In April last year the secondaries firm used its Landmark Private Equity Secondaries Fund XVI to finance Clearlake’s purchase of Reservoir Capital‘s stake in Clearlake’s GP management company, Secondaries Investor reported.

Landmark financed that transaction using a preferred equity structure, according to three sources familiar with the deal.

Clearlake declined to comment on whether Landmark increased its investment in Clearlake in this latest deal.

Goldman Sachs and Dyal declined to comment.

Landmark is seeking $4 billion for Fund XVI, according to PEI data.

Dyal is in market with its fourth fund, Dyal Capital Partners IV, for which it hopes to raise $5 billion, according to documents from the Minnesota State Board of Investments. Dyal plans to make a 1 percent GP commitment, the papers showed.

New York-based Dyal closed Fund III on $5.3 billion. The fund sought to make 10-12 investments in private equity firms. As of the vehicle’s closing in February 2017, the firm had made investments in Vista Equity Partners, EnCap Investments, Silver Lake Technology Management, HIG Capital, Starwood Capital Group and KPS Capital Partners.

Among the announced deals since Fund III wrapped up its fundraising, it has invested in Vector Capital and three credit managers: Cerberus Capital Management’s direct lending arm Cerberus Business Finance, Atalaya Capital and TPG credit arm TPG Sixth Street Partners.

Petershill reportedly closed its second vehicle, the $2.5 billion Petershill II, in February. Its previous investments include a non-voting minority investment of less than 10 percent in Accel-KKR, a firm that invests in buyouts, growth equity and credit.

Minority investments in alternative asset managers have risen in recent years. From the beginning of 2017 through the third quarter of that year 27 deals were struck, according to Pitchbook. Since then, multiple deals have closed, including minority investments in Kohlberg & Company and PAG by Blackstone and Dyal’s investments in Vector and Cerberus.