By Greg Roumeliotis and Soyoung Kim
NEW YORK May 10 Warburg Pincus LLC has secured
$11.2 billion for its latest global fund, one of the largest
private equity funds raised since the financial crisis,
underscoring investor demand for high-return offerings at a time
of record-low interest rates.
Private equity firms moderated their fundraising
expectations following the crisis, launching funds that in
general were smaller than their predecessors. Warburg's previous
fund, which had a $12 billion fundraising target, ended up
raising $15 billion in 2007.
Warburg's latest fund also had a $12 billion target. While
it fell short of that, it is still larger than other mega
private equity funds raised in the last six months, including
Silver Lake LP's $10.3 billion fund and Advent International
Corp's 8.5 billion euro ($11.1 billion) fund.
Last year, Blackstone Group LP raised the largest
private equity fund since the financial crisis, amassing $16
billion after four years of fundraising. It also raised a $13.3
billion private real estate fund.
For most private equity funds, fundraising remains
challenging due to fierce competition. In the first quarter, 129
private equity funds reached a final fundraising close like
Warburg, raising a total of $67 billion, compared with 203 funds
that raised $79 billion in the first quarter of 2012, according
to market research firm Preqin.
Sentiment, however, appears to be improving as institutional
investors, particularly pension funds with huge liabilities,
look for outsized returns that exceed the broader market.
Carlyle Group LP co-founder David Rubenstein said on
Thursday that the firm could exceed its $10 billion fundraising
target for its latest flagship U.S. buyout fund.
New York-based Warburg Pincus said on Friday that investors
in the new fund, Warburg Pincus Private Equity XI, include
public and private pension funds, sovereign wealth funds and
wealthy individuals, with a significant number of the new
investors coming from outside the United States.
The firm reached a final close of the fund within one year
of closing the fund's first part, in line with its initial plan,
"This successful fundraise, in a challenging environment,
was driven by strong support from both existing and new
investors," Warburg Pincus co-President Charles Kaye said in the
Warburg's predecessor fund, Warburg Pincus Private Equity X,
was valued at 1.2 times its investors' money and had a net
internal rate of return of 5.5 percent as of the end of
September 2012, according to one of its investors, the
Washington State Investment Board.
The predecessor of that fund, the $8 billion Warburg Pincus
Private Equity IX, which was raised in 2005, was doing better,
valued at 1.6 times its investors' money and reporting a net
internal rate of return of 10.4 percent, the Washington State
Investment Board added.
Warburg Pincus Private Equity XI asked for fees to manage
investors' money of between 1.3 percent and 1 percent, according
to another investor, the New Jersey Division of Investment. As
customary in private equity, it will also take 20 percent of
investment profits in the form of the so-called carried
The fund will invest in a range of companies, from venture
capital startups to later-stage growth capital and leveraged
buyout opportunities, in sectors that include energy, financial
services, healthcare, technology, media and telecommunications,
and consumer, industrial and services.
Founded in 1966, Warburg Pincus has more than $40 billion in
assets under management and a portfolio of more than 125
companies. The firm and its fund managers committed to invest
more than $300 million of their own money into the latest fund.
Warburg's current and past investments include U.S. retailer
Neiman Marcus, European pharma company Zentiva,
Indian telecom firm Bharti Telecom, Canadian oil sands company
Meg Energy Corp, Chinese department store Intime
1833.HK and Dutch cable company Ziggo NV.
Antero Resources, an oil and natural gas company controlled
by Warburg, is preparing for an initial public offering that
could value it at as much as $10 billion, three people familiar
told Reuters this week.