Family Office Focused L Squared Closes Fund III

L Squared Capital Partners has closed its oversubscribed third fund, L Squared Capital Partners III LLC, with just over $500 million of capital.

The new fund was supported by the firm’s existing investors and several new limited partners including family office investors, a focus of L Squared since its founding in 2014. Family offices make up the vast majority of Fund III’s capital commitments. With the closing of Fund III, the firm has achieved $1 billion in assets under management.

“We are incredibly appreciative of the tremendous support provided to us by our existing investors during this time of uncertainty,” said Jeff Farrero, a managing partner at L Squared. “This allowed us to complete the fundraising quickly so that we can keep our focus on quality investing.”

L Squared invests from $20 million to $100 million of equity in companies that have revenues of $10 million to $100 million and EBITDA of $3 million to $25 million. Sectors of interest include tech-enabled services and software; industrial technology and services; and education technology.

With its first two funds, L Squared acquired 10 platform investments, closed 26 add-on acquisitions, and exited 3 of its Fund I platforms. For Fund III, L Squared intends to add 7 to 9 new platform investments.

The three exited Fund I investments were Virtium, a California-based provider of industrial-grade solid-state memory storage products, which was acquired in July 2015 and sold in May 2019 to Court Square Capital Partners; Teaching Strategies, a Maryland-based provider of early childhood educational resources, including curriculum and web-based assessment products, which was acquired in October 2014 and sold to Summit Partners in May 2018; and Edlio, a California-based provider of community engagement services for K-12 public, private and charter schools, which was acquired in July 2016 and sold to LLR Partners in October 2018.

“It is a great credit to our management teams whose excellent work has allowed us to experience a quick and successful fundraising process,” said Rob Healy, L Squared’s co-founder and managing partner. “We all look forward to the challenge of building additional outstanding businesses in Fund III.”

L Squared is headquartered in Newport Beach, California with an additional office in Chicago. In addition to Messrs. Healy and Farrero, the firm is managed by Sean Barrette, Randall Hunt and Adam Kimura, all of whom worked together at Chicago Growth Partners prior to founding L Squared in July 2014.

L Squared did not use a placement agent to assist with the raising of Fund III and Vedder Price provided legal services.

Private Equity Professional | September 23, 2020

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