Thomas H. Lee Partners LP has told investors it expects to seek $3 billion for its next private-equity fund, less than half the amount it raised for the prior pool that closed in 2007, according to two people briefed on the matter.
The Boston-based firm plans to start formally marketing its fund next year, according to the people, who asked not to be identified because the information is private. It had previously considered coming to market at the end of last year with a goal of $4 billion, two people with knowledge of the plans said at the time.
Matt Benson, a spokesman for THL at public-relations firm Sard Verbinnen & Co., declined to comment on the fundraising.
Thomas H. Lee joins a number of peers in targeting smaller amounts than their predecessor funds raised during the buyout boom that ended with the 2008 financial crisis. KKR & Co. expects to finish raising more than $8.3 billion for its North American buyout fund this month, down from the $17.6 billion raised by its 2006 fund. Providence Equity Partners closed its latest fund at $5 billion in June, compared with $12.1 billion gathered for the previous fund.
Thomas H. Lee told clients at its annual meeting in November that a smaller fund will take less time to deploy capital, helping to generate a stronger internal rate of return, said one of the people. The firm chose the fund size based on how much money it thinks it can put to work and how fast, according to another person.
Thomas H. Lee has yet to exit some investments made at the height of the buyout boom, such as Clear Channel Communications Inc. and Univision Communications Inc. Clear Channel has posted annual losses ever since Thomas H. Lee and Bain Capital Partners LLC took control of it in 2008. The U.S. broadcaster is offering to double interest to push out maturities on some of the $4.3 billion it owes as it faces its first cash-flow deficit in four years.
Thomas H. Lee bought some debt in the company and sold it at a gain, helping offset paper losses tied to the equity.
One portfolio company, Aramark Holdings Corp., this month said it expects to sell as much as $959 million in shares through an initial public offering. Thomas H. Lee, which bought the provider of institutional food and facilities services in 2007, is planning to sell 1.4 million shares, out of 41.7 million shares offered in the IPO, regulatory filings show.
Thomas H. Lee invests in media and information services, business and financial services and consumer and health care.
Thomas H. Lee is named after its founder Thomas Lee, who left to start another firm in 2006, handing leadership to Scott Sperling, Scott Schoen and Anthony Dinovi. Schoen stepped down last year. There have been other high-level departures, including those of managing directors Chuck Brizius, Scott Jaeckel and Jesse Hermann.