BC Partners eyes 2023 return as it wraps up latest flagship below target

The London-headquartered firm had sought €8.5bn for its 11th and largest buyout fund.

BC Partners is set to wrap up its latest flagship fund below target after nearly two years on the fundraising trail, Private Equity International has learned.

The London-headquartered firm will hold a final close for BC European Fund XI at the end of January and “expects to raise capital broadly in line with its prior two funds”, according to a 25 January letter to BC’s investors seen by PEI.

BC’s 2011-vintage European Capital IX and 2016-vintage European Capital X raised €6.7 billion and €7 billion, respectively, PEI data shows. Fund XI was launched in early 2020 with an €8.5 billion target, Bloomberg previously reported.

“We expect to be back in market with Fund XII in the second half of 2023,” BC chairman and partner Raymond Svider said in the letter. “We look forward to sharing with you the final outcome of our Fund XI raise in due course.”

BC Partners declined to comment when approached by PEI.

BC’s fundraise is understood to have been impacted by slower monetisation of Fund IX during the pandemic, which dragged performance, as well as an accelerated investment pace for Fund X. The process was also hindered by some LPs pausing commitments to prioritise and mitigate disruption to their portfolios.

Fund XI received a €220 million commitment from Tennessee Consolidated Retirement System, $100.8 million from New York City Police Pension Fund and €6.5 million from Dallas Fort Worth International Airport, PEI data shows.

Fund XI is already invested or committed in seven transactions worth €2.4 billion and has generated more than €1.8 billion of co-investments, the letter said. The fund targets control buyouts in Europe and North America with enterprise values typically greater than €300 million.

Its two previous flagship funds returned about €4 billion to investors over the past 12 months, according to the letter. Fund IX and Fund X had generated a gross multiple of invested capital of 2.9x and 1.7x, respectively, as of Q3 2021, the firm’s latest reported valuation.

Fund XI’s imminent close comes on the heels of a busy December for BC, which raised $1.2 billion against a $750 million target for its Special Opportunities Fund II and secured more than €900 million for its debut fund European Real Estate I. The firm expects to return to market with SOF III in the second half of this year and BCPERE II in late 2022 or early 2023, the letter noted.

Some of BC’s European peers fared a little better on the fundraising trail during the pandemic. CVC Capital Partners amassed €22 billion for its eighth flagship fund in the largest close of 2020, while Nordic Capital and Hg gathered €6.1 billion and €4.4 billion for Nordic Capital X and Genesis 9, respectively.

Private equity firms gathered about $733 billion in 2021, the highest capital gathered in history, according to PEI’s latest fundraising report. The average fund size also reached a peak of $530 million, with the average process taking roughly 10 months to complete.

BC is the 53rd largest private equity firm globally and 12th in Europe, according to the latest PEI 300 ranking.