Landmark strikes preferred equity deal with Clearlake – exclusive

Landmark Partners has financed Clearlake Capital’s purchase of Reservoir Capital‘s stake in Clearlake’s GP management company, Secondaries Investor has learned.

Simsbury, Connecticut-headquartered Landmark used its latest private equity secondaries vehicle to finance the transaction using a preferred equity structure, according to three sources familiar with the deal.

One of the sources said the stake represented around a 20 percent interest in Clearlake and that the deal closed in April.

Landmark is seeking $4 billion for Landmark Private Equity Secondaries Fund XVI, according to PEI data. The fund held its first close on $224 million in May, according to a filing with the US Securities and Exchange Commission.

Limited partners who have backed the fund include New Mexico State Investment Council, Employees’ Retirement System of the State of Hawaii and Employees Retirement System of Texas.

Santa Monica-headquartered Clearlake was founded in 2006 and invests in both private and public deals through debt or equity in the lower and mid-market, according to its website. The firm targets software and technology-enabled services, industrials and energy, and consumer sectors through buyouts, corporate divestitures, recapitalisations and reorganisations.

Its debut fund, the 2006-vintage $180 million Clearlake Capital Partners I, was seeded entirely by Reservoir, according to PEI data.

New York-headquartered Reservoir makes opportunistic investments in public and private direct transactions as well as investments in private equity funds.

With record levels of dry powder – as much as $71 billion according to research by UBS Private Funds Group – as well as fierce competition for LP portfolios, secondaries firms have been widening their investment scope to include non-traditional deals such as preferred equity financing and GP interests transactions, market sources told Secondaries Investor.

Landmark, Clearlake and Reservoir declined to comment.