Clayton Dubilier holds $2.66bn interim close

New York-based Clayton Dubilier & Rice has held a $2.66bn interim close on its seventh fund, moving the firm ever closer to a $3.5bn target. Sources indicated that a final close could come as soon as late November.

New York-based Clayton Dubilier & Rice has closed on $2.66 billion, according to filings with the Securities & Exchange Commission, an interim closing for firm, which has set a target of $3.5 billion (€2.9 billion) for its seventh fund. Sources told PEO that the group could reach a final closing as soon as Thanksgiving in late November, and that the final figure for the fund, Clayton Dubilier & Rice Fund VII, would likely approach the $4 billion hard cap set by the firm.

Joseph Rice, chairman, Clayton Dubilier & Rice

Clayton Dubilier pioneered the use of senior operating executives in growing portfolio companies. The firm counts among its operating partners Jack Welch, the former head of General Electric.

The filing, dated October 11, 2005 and signed by managing partner Kevin Conway, indicates that the firm has hired Credit Suisse First Boston as placement agent to market the fund. The firm reported an earlier close of $1.45 billion for the fund, in a separate filing dated in December of last year.

The filing also estimates an annual management fee of $52.5 million, which would imply a 1.5 percent fee if the firm reaches its goal.

The California State Teachers’ Retirement System has publicly said it would commit $100 million to the new fund, while Castle Alternative Invest AG, a unit of Swiss-based LGT Capital Partners, has pledged $15 million to the vehicle. Yale University has also historically supported Clayton Dubilier funds.

Clayton Dubilier has mostly been in exit mode over the past couple years, although for the acquisitions it has made, the firm has set its sights high. This past September, the group teamed up with Merrill Lynch and The Carlyle Group to acquire Ford Motor’s car rental unit The Hertz Corp., a $15 billion deal. In March, Clayton Dubilier took Rexel SA private, which at €3.7 billion, was billed as the largest ever European public to private at the time of the deal. Rexel is an electrical parts and supply company.

Meanwhile, the firm was busy finding realisations in 2004, logging profitable exits of Kinko’s through a $2.4 billion sale to FedEx Corp. and Jafra Cosmetics, through a sale to German strategic Vorwerk & Co. Clayton Dubilier also engineered a recap of VWR International that returned approximately 50 percent of invested capital. 

While Clayton Dubilier will take on the big deals, the firm is not as interested in raising the largest fund. Its $4 billion hard cap on this latest vehicle, if reached, would not be a significant jump over its sixth fund, which drew $3.5 billion of capital.

A source that attended the firm’s October 12 annual LP meeting at the New York W Hotel quoted Clayton Dubilier chairman Joseph Rice as saying that the fund was scaled to the firm, not the other way around, the implication being that Clayton Dubilier didn’t want to alter its strategy by raising a significantly larger fund.

Clayton Dubilier maintains offices in New York, London and the Cayman Islands.