Bain targets funds totaling $15bn(2)

Eighteen months after closing its last round of fundraising, Bain Capital is back with a modestly larger $10 billion core fund target, but a $5 billion co-investment fund, reflecting high LP co-investment demand as well as the possibility of a slowdown in the deal market.

Just 18 months after a previous round of fundraising, Bain Capital is approaching limited partners about its 10th private equity fund, which will seek to raise $10 billion (€7.2 billion) for a core vehicle and $5 billion in a co-investment fund.

In April 2006, Boston-based Bain Capital closed its ninth fund, rounding up a total of $10 billion, including $8 billion for a core fund and $2 billion in co-investment capital. Bain’s co-investment vehicles do not charge fees on committed capital. Fund VIII raised $3.5 billion in 2004, with $750 in additional co-investment commitments.

For its new round of fundraising, Bain Capital is remaining agnostic as to the future volume of dealmaking in the buyout market. The core fund, with its $10 billion target, is only modestly larger than the previous vehicle. Bain Capital’s senior partners are telling LPs that the $5 billion co-investment vehicle may be drawn from significantly if the deal market keeps its current pace, or it may remain untouched if the market tightens.

As with previous Bain funds, the core private equity vehicle will co-invest alongside regionally focused funds targeting Asia and Europe.

This past March, Bain Capital for the first time raised a separate pool of capital for Asia, rounding up a total of $1 billion. To date no investments have been made from that fund.

If Bain Capital hits its target of $15 billion in a next round of fundraising, it will keep the firm among the largest private equity firms in the world. Among the several other large fundraising efforts in the market now, The Carlyle Group is targeting a reported $17 billion, while Warburg Pincus is targeting as much as $15 billion.