GTCR beats Fund X target with $3.25bn close

The Chicago-based firm took just seven months to raise its largest-ever fund.

GTCR has closed its 10th fund with more than $3.25 billion in commitments, beating its $3 billion target in just seven months.

The Chicago-based firm brought back about 80 percent of existing investors, which include pensions, endowments, foundations, funds of funds and wealthy individuals. Generally, the firm expects to bring in only a few new investors into each fund, according to David Donnini, a principal with the firm.

The mid-market firm attracted about “half a dozen” new limited partners, half of which were internationally based mostly in Europe and Asia, Donnini said.

“Historically, we’ve been underrepresented internationally,” Donnini said. “We’ve had a large established group of domestic relationships. As the economy and world becomes more global, we wanted to become more global ourselves and look more like the market in terms of an international LP base.”

The firm did not use a placement agent for the fundraising.

GTCR’s high percentage of returning investors explains the swiftness of the fundraising. The fund's LP-friendly terms likely helped with re-ups. For example, the firm has always put 100 percent of any deal fees back into the fund. The firm also established an “interim clawback” provision in the fund, meaning if the fund gets over-distributed, it would be assessed at various points during the fund life and get “trued up” at that time, Donnini said.

The firm has capital remaining for one new investment in the prior fund before it activates Fund X, Donnini said.

A seven months-long fundraising in today’s environment is extremely quick – as the average fundraising is expected to last up to 20 months. Firms that have had the most success are the ones with the strongest track records and a history of making their LPs happy. Another firm that is moving quickly through its fundraising is ABRY Partners, which is expected to take only a few months to raise its $1.6 billion seventh buyout fund and its $1.3 billion senior debt fund, which are being raised simultaneously.

GTCR raised $2.75 billion for its prior fund in 2006. The firm, founded in 1980, has about $7 billion under management. GTCR partners with management teams to target specific sectors, including financial services and technology, healthcare and information services and technology.