Firm: Bain Capital LLC
Fund: Bain Capital Europe IV
Target: 2.5 billion euros
Placement Agent: None
The Boston-based firm, founded in 1984 by partners from the consulting firm Bain & Company including former GOP presidential candidate Mitt Romney, launched fundraising in mid November for Bain Capital Europe IV, which has a target of 2.5 billion euros ($3.4 billion), a person familiar with the effort told Buyouts. And just as Bain Capital Fund XI LP stepped down to a $6 billion target, from $8 billion for its previous fund, so also the European fund is planned to be smaller than its predecessor, which closed at 3.5 billion euros in 2007.
A closing is anticipated late in the second quarter on the Europe IV fund, the person said. In contrast to the era before the crisis that began in 2008, which was marked by mega deals domestically and globally, Bain Capital intends to use the new fund to pursue smaller deals in Europe.
Europe IV also will reflect the evolving philosophy that Bain Capital is employing for Fund XI, in a couple of different respects. For one thing, the firm will offer investors two options for the fee structure of the European fund, the person said.
One option offers the standard management fee, at 1.75 percent, with 20 percent carried interest for the firm after delivering the LPs a 7 percent preferred return. The second option includes a much reduced management fee at 0.75 percent but a premium carry of 30 percent and no preferred return hurdle.
Bain Capital offered a similar range of choices for Fund XI; a conventional 1.5 percent management fee with 20 percent carry and a 7 percent preferred return hurdle; a 1 percent management fee with 30 percent carry and a 7 percent hurdle; or a 0.5 percent management fee with 30 percent carry and no preferred return hurdle.
About a third of investors opted for the lowest management fee and no hurdle, the person said, especially fund of funds managers that sought to minimize annual fees but were happy to pay for performance, while most of the remaining two thirds opted for the conventional fee structure. As a result, the firm decided to streamline the options for Europe IV, offering the two more popular choices there.
Europe IV also will feature a relatively rich, 10 percent GP commitment of 250 million euros, the person said. Bain Capital has been telling investors that, due to the strength of recent exits, it has raised the GP commitment for Fund XI to about $800 million of its own capital, up from its previous $600 million pledge, LP investors told sister website peHUB in October.
Bain Capital, which so far has raised $4.8 billion for Fund XI, expects to wrap up fundraising by year-end, and the GP commitment should help the fund reach its $6 billion target. The final close, however, might not come until January, because some investors may need to put a 2014 datestamp on their investment, the person said.