Clayton, Dubilier & Rice has raised close to $3 billion for its ninth buyout fund, which is targeting $5 billion, according to a source with knowledge of the situation.
The firm has collected $2.65 billion for Fund IX, according to documents filed with the US Securities and Exchange Commission, on top of which CD&R will commit $250 million in the form of a general partner commitment, according to four sources who have seen the private placement memorandum for the fund.
CD&R declined to comment.
The fund has received a strong level of interest from LPs, with roughly 85 percent of the committed capital coming from existing investors, the source told Private Equity International. It is unclear if CD&R will stop fundraising at $5 billion.
“The expectation is that the fund will be largely completed by year-end but the official final close will come in early 2014,” the source said.
Fund IX will charge a 1.5 percent management fee that will decrease to .75 percent after the five year investment period, sources told PEI in prior interviews. Fund IX will share all of the deal fees with LPs in order to offset the management fees.
Fund IX’s target is on par with the firm’s prior vehicle, which closed on $5 billion in 2009 and received commitments from Adams Street Partners, the Los Angeles Fire & Police Pension System and Rutgers University, according to PEI’s Research and Analytics division.
CD&R’s Fund VIII was generating a 20 percent net internal rate of return and a 1.7x invested capital multiple, as of 30 June, the source told PEI. Returns are estimated to be higher now because CD&R exited its portfolio company, Envision Healthcare on 13 August, the source said. Fund VIII is 80 percent invested, with 60 percent of capital having been returned to investors.
CD&R was founded in 1978 and focuses on investments in North America, Western Europe and Asia. The firm has managed around $18 billion in investments across 54 businesses and maintains offices in New York and London.