Warburg’s latest flagship halfway to target in advance of May second close

The firm's 14th flagship programme is seeking $16bn and will enjoy a GP commitment of more than $1.1bn.

Warburg Pincus, one of the world’s top 10 biggest private equity firms, according to the PEI 300, has closed on at least half of its latest flagship vehicle’s target as it seeks to raise its largest fund yet.

The New York-headquartered firm raised at least $8.3 billion in a February first close for Warburg Pincus Global Growth 14, according to documents prepared by investment consultant Callan for New Hampshire Retirement System‘s investment committee meeting last week.

The next close is scheduled for 2 May, with additional closes expected throughout the year.

During the 18 March investment committee meeting of the NHRS, trustees approved a $50 million commitment to the fund, despite trustee concern with fund size.

The fund is targeting $16 billion, a 6.3 percent increase from the amount its previous flagship raised. Warburg Pincus Global Growth (Fund XIII) closed on $15.05 billion ahead of a $13.5 billion target, according to PEI data.

Fund 14 will enjoy a $1.1 billion GP commitment, 6.9 percent of the target, according to the Callan documents.

The 14th programme has a global focus and a broad sectoral remit, including technology, financials, healthcare, real estate, energy and industrials, according to Callan.

The hard-cap for the fund is undisclosed and a spokeswoman for Warburg declined to comment. Investors in the fund also include Minnesota State Board of Investment, which made a $300 million commitment, according to PEI data.

Despite the modest increase in fund size, which Callan noted reflected discipline in fundraising, one NHRS trustee questioned whether the large pot of capital could be difficult to deploy given the frothiness in the growth space, particularly in technology.

Jim Neary, co-head of US private equity at Warburg, virtually attended the NHRS meeting and downplayed concerns of frothiness, noting there were still well-priced opportunities, particularly in the healthcare sector.

The trustee who voiced the concern ultimately seconded the motion to approve the commitment. However, he did note that in his view, sector specialists, rather than generalists, would be more likely to achieve outperformance.

Fund 14 has already called 5 percent of its commitments and made two investments: $203 million in tech-enabled construction management firm TRC companies and $270 million in T-Mobile Netherlands, according to the NHRS documents.

In aggregate, Warburg has generated a 1.77 net total-value-to-paid-in and a 12.1 percent net internal rate of return as of September, according to Callan.

Warburg does not target first-quartile performance given the level of diversification in the funds, the documents noted.

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