US-based private equity firms The Blackstone Group, Kohlberg Kravis Roberts and UK-based Terra Firma are set to close buyout funds totalling nearly $50 billion (€39 billion) in the coming weeks, as the flow of capital into the asset class shows no sign of abating.
Blackstone has almost finished raising an extra $5 billion from its existing investors, according to one industry source, which will take its global buyout fund to $20.6 billion. The US firm already has the world’s largest buyout fund, with $15.6 billion of commitments, but decided to increase this in order to boost its firepower and avoid club deals. The increase has been executed like a rights issue, with existing investors given the opportunity to increase their previous commitments.
Raising the additional funds has proved harder than expected, the source said. With so many big funds coming to market in 2006, many large investors had already committed their private equity allocations by the time Blackstone communicated its plans in the latter part of the year.
However, the firm remains well on track to meet its $5 billion target, he added.
KKR is also approaching a close on its $16.6 billion global buyout fund, which was set to be the world’s largest until Blackstone moved to increase its own fund. KKR has already garnered $16.1 billion of commitments, and is on target to reach its upper limit of $16.6 billion.
Separately, it is also raising a $4 billion fund dedicated to investments in Asia, which will close later this year. The firm’s largest investor, the Washington State Investment Board pension scheme, is preparing to commit $500 million to the fund.
A final close is also said to be “imminent” for Terra Firma’s latest buyout fund, according to an investor. At €5 billion ($6.5 billion), the fund will also be its largest ever and is €2 billion more than the €3 billion the firm was originally targeting. The source said Hands’ decision to commit €100 million of his own money to the fund boosted investor support.