* First marquee fund from Bain since financial crisis
* Targets mostly North American deals
* Seeking acquisitions of $200 mln to $500 mln
By Steve Gelsi
Oct 11 (Buyouts Magazine) - Bain Capital has raised nearly
$5 billion for its eleventh flagship buyout fund, its first
since the 2008 financial crisis, according to a potential
investor in the fund.
Co-founded by 2012 Republican presidential candidate Mitt
Romney, Bain Capital plans to reach its target of $6 billion for
Bain Capital Fund XI by the end of the year, the potential
investor said. Romney left Bain Capital in 1999.
Bain Capital has drawn commitments of about $4 billion from
limited partners, and plans to invest about $800 million of its
own capital in the fund for about $4.8 billion for the core
buyout fund thus far, the potential investor said.
Bain Capital has typically invested at least 10 percent of
its own money in its past funds. Each flagship fund has also
raised a smaller co-investment vehicle for limited partners to
gain access to specific deals. Bain Capital X had a $10 billion
target for the main fund and $5 billion for co-investments. Fund
IX closed with $8 billion and a $2 billion co-investment
The Boston-based private equity firm disclosed In April that
it had raised $2.3 billion for Bain Capital Fund XI in a Form D
filing with regulators.
The Pennsylvania State Employees' Retirement System, which
reviewed the new offering, has disclosed that the firm projects
a minimum internal rate of return (IRR) of 20 percent.
The pension system also said that Bain Capital Fund XI plans
to make mostly North American investments in the $200 million to
$500 million range, with the flexibility to move up to $1
billion in bigger deals.
Bain Capital's most recent buyout fund, Fund X, dates back
to 2008 and raised $10.7 billion. The fund had generated a 2.7
percent IRR as of Dec. 31, 2012, according to data from the
Regents of the University of California. The vintage 2006 Bain
Capital Fund IX raised $8 billion and logged an IRR of 7.1
percent as of the same date. Bain Capital Fund VIII from 2004
has an IRR of 11.8 percent.
Private equity fund sizes at the large end of the market
have dipped since the financial crisis. But some firms have
managed to build up sizeable investment vehicles as the economy
picks up steam and low interest rates encourage allocations
into buyouts from institutional investors.
Apollo Global Management LLC is mulling a move to
get investor permission to increase the cap of Apollo Investment
Fund VIII LP to as much as $20 billion, according to a report by
Carlyle Group LP has set a cap for Carlyle Partners
VI LP at $12 billion. And Kohlberg Kravis Roberts & Co
plans to draw $10 billion for its North American XI Fund LP,
with more than $8 billion raised as of the summer, according to
Silver Lake, the buyout shop working with Michael Dell to
buy Dell Inc, raised $10.3 billion for Silver Lake
Partners IV in an effort that wrapped up in April. Blackstone
Group LP completed fundraising last year at $16 billion
for its latest buyout fund, Blackstone Capital Partners VI LP.
With about $70 billion of assets under management, Bain
Capital ranks as one of the largest private equity firms in the
world, with holdings including retailer Toys 'R Us, The Weather
Channel and Bright Horizons Family Solutions.
Buyout firms traditionally charge a 2 percent management fee
on committed capital during the investment period and a 20
percent carried interest fee on investment profits, but back in
the late 1990s Bain Capital moved to charge a 30 percent fee.
With Fund XI Bain Capital offered investors a choice of
fees. Bain Capital offered investors a 1.5 percent management
fee/20 percent carried interest fee structure after providing
investors a 7 percent preferred return rate. It's also offered
a 0.5 percent management fee/30 percent carried interest fee
structure with no preferred rate of return.
The private equity firm traces its roots back to 1984.
A spokesperson from the firm declined to comment.