By the numbers: LBC’s returns are strong among peers, but falling short of targets

The US mid-market lender is seeking $1bn for its fifth flagship fund, which is targeting a net IRR of 11-13%.

LBC Credit Partners’ recent fund performance has been on the upper end of the spectrum among its competitors by fund vintage year, though it has fallen short of the goals it specified to investors.

The Radnor, Pennsylvania-based firm’s LBC Credit Partners III and IV have each targeted returns in the mid-teens but have fallen short of the desired ranges. The 2013-vintage Fund III has posted a 10.1 percent net internal rate of return, while that figure for 2016-vintage Fund IV was 12.4 percent, according to documents from the Minnesota State Board of Investments.

Another set of pension fund investor materials from the Pennsylvania Public School Employees’ Retirement System showed that LBC was targeting net IRRs of 15 percent and 14-16 percent for Funds III and IV, respectively.

According to data from Burgiss comparing fund performances, LBC’s respective vehicles rank in the upper quartiles for similar funds of the same vintage years. For this comparison, LBC’s Fund III and Fund IV were compared against funds launched in 2013 and 2016, respectively, in the generalist category, as LBC’s investment mandate allows for both senior and mezzanine loans.

Comparing Fund III against vehicles with similar investment mandates, Fund III’s 10.1 percent net IRR falls into the second-highest quartile for the 15 generalist funds launched that year. The 50th and 75th percentiles are 9.42 percent and 11.11 percent, respectively. Fund IV’s 12.1 percent net IRR fell in the top quartile among the 19 generalist funds launched that year. The 75th and 95th percentiles are 11.44 percent and 39.31 percent, respectively.

LBC Credit Partners V is seeking $1 billion for the firm – a figure that, if history serves as any guide, may be surpassed. The credit manager has either met or exceeded all the goals of its last four flagship funds.