London-headquartered Doughty Hanson has closed its latest buyout fund on €1.6 billion ($2.1 billion). The firm originally set out to raise €3 billion at launch in early 2003, a target that was later scaled back to €2 billion following a €700 million first close in September 2003.
According to a source close to the firm, Doughty could have raised more than €1.6 billion after investor interest in the fund had picked up. However, investors who had committed to Doughty Hanson IV early on insisted it be capped, the source said.
Existing limited partners in the fund insisted on the cap because they wanted to avoid any dilution of the proceeds from the first investment that Fund IV had backed, the source said.
A €175 million refinancing of French industrial battery company Saft, which Doughty acquired in October 2003 for a total consideration of €390 million is scheduled for next month. It will return approximately 1.5x the original equity investment, according to the source.
Doughty Hanson IV received commitments from blue chip investors HarbourVest Partners, Ilmarinen Insurance, JP Morgan Asset Management, Morley Fund Management, Pantheon Ventures, Partners Group, State of Michigan Public Employee Pension Fund and Verizon Asset Management among others.
Investors in the fund comprised 80 percent of returning LPs and 20 percent new investors. In terms of geography, 50 percent of investors came from Europe, 40 percent from the US and 10 percent from Asia/Middle East.
To date, the fund has deployed approximately €425 million to fund four investments: Saft; New York-based luggage company Tumi; Balta, a Belgian rug and carpet manufacturer; and ATU, a German car parts and service provider.
Doughty Hanson’s fund is not the only high profile fundraising to fall short of an initial target recently. Just before Christmas, Nordic firm Industri Kapital revealed that the IK 2003 fund would close on €800 million, short of a revised €1.6 billion target and more than two thirds down on the original €2.5 billion goal.