(Bloomberg) — Leonard Green & Partners plans to raise a new fund to provide ways for private equity firms to hold certain portfolio companies for longer, according to people with knowledge of the matter.
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The firm hired Blackstone Inc. senior managing director David Fox and Garrett Hall, a partner at AlpInvest Partners, as partners and co-heads of the new private equity effort focused on continuation funds and other so-called GP-led secondary transactions, said the people, all of whom requested not to be identified discussing confidential information.
Continuation funds have grown in popularity among sponsors as a way to extend the ownership timeline on assets by moving the portfolio company from the existing buyout fund into a new dedicated vehicle and raising new capital against it. Managers have also gotten more creative with other structures to try to win more time to finish operational overhauls or look for a better price in a sale.
The new strategy keeps Leonard Green — led by managing partners John Danhakl and Jonathan Sokoloff — focused on private equity, which has been the case since its inception in 1989.
A spokesperson for the Los Angeles-based firm declined to comment. A Blackstone spokeswoman confirmed Fox left the firm at year-end. A spokesperson for Carlyle, which owns AlpInvest, declined to comment.
Many large alternative asset managers have sought to expand into secondaries and other strategies as they aim to capture larger allocations from institutional investors such as sovereign wealth funds, pensions, family offices and endowments.
Leonard Green, which is partially owned by a Blackstone-managed fund, has invested in more than 120 companies through buyouts, take-privates, recapitalizations, growth equity injections and other methods. It has historically focused on the consumer sector, health care and business services.
The firm backed insurance brokerage Hub International last year and counts Whole Foods Market Inc. and Shake Shack Inc. among its past investments.
Read More: Leonard Green Nears $18.3 Billion Close Across Two Funds
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