Exclusive: Bain hits $6bn target for Fund XI

The Boston-based firm is likely to hold a final close for the fund this month.  

Bain Capital has raised at least $6 billion for its Bain Capital Fund XI, which is expected to close in the next week, a source familiar with the matter told Private Equity International. 

The amount raised does not include the general partner commitment, which is expected to be about $800 million, according to the source.

Bain declined to comment.

Fund XI launched in July 2012, with a $6 billion target and a $7.5 billion hard-cap, according to documents from the Public School Employees’ Retirement System of Pennsylvania. The fund had raised about $4.8 billion as of October 2013, including about $4 billion from LPs and the GP commitment, according to media reports.

Fund XI will be smaller than Bain’s prior funds, allowing it to be more “middle-market centric”, a limited partner in the fund told PEI. Bain Capital Fund X closed on $10.7 billion in 2007 and was generating a net internal rate of return of 5.2 percent as of 30 September 2013, according to documents from the Employees’ Retirement System of Rhode Island. Fund IX raised $10 billion in 2006, and was posting a net IRR of 5.96 percent as of 31 March 2013, according to documents from the California State Teachers’ Retirement System.

Fund XI’s fund terms also differ from Bain’s prior funds, according to the LP source. LPs may select between three options: a 1.15 percent management fee with a 20 percent carry and 7 percent preferred return, a 1 percent management fee with a 30 percent carry and 7 percent preferred return, or a 0.5 percent management fee with a 30 percent carry and no preferred return.

LPs in Bain funds VI through X paid a management fee of 2 percent with a 30 percent carry, according to a source with knowledge of the matter.

Most LPs will likely select the first option, because it is closest to “market terms”, the LP said.

No capital has been called for Fund XI because Bain is still investing Fund X, according to the LP.

Earlier today, it emerged that the firm had partnered with Advent International and Danish pension ATP to acquire Nordic payments provider Nets for DKK17 billion (€2.3 billion; $3.1 billion). Bain and Advent will each invest DKK2.6 billion of equity in the business. Bain will fund the acquisition from Fund X and its Bain Capital Europe Fund III, which closed on €3.5 billion ($4.8 billion, £2.9 billion) in 2008, PEI reported.

Bain, which is headquartered in Boston and was founded in 1984, also raises European-and Asian-focused funds. The firm’s most recent Bain Capital Asia Fund II closed on $2 billion in 2011.