Bain Offers To Cut Size Of Co-Investment Fund

Bain Capital is offering investors the chance to reduce their commitments to a $1.8 billion co-investment fund, according to, the sister Web site of Buyouts. Each limited partner would be allowed to cut back by up to 50 percent, assuming that a majority of investors ratify an amendment to the original fund documents as expected.

Bain Capital closed the co-investment fund in late 2007 as a sidecar to Bain Capital Fund X, an $11.5 billion general buyout fund. The idea was that the pool would be used for North American deals in which Bain Capital’s equity check exceeded $650 million, with the general buyout and co-investment funds to equally splitting the overage. The co-investment fund also could theoretically be used for deals out of Bain Capital’s European and Asian funds, although the initial waterfall for those vehicles flowed into Bain Capital Fund X.

Since the co-investment fund was raised, however, it had only been tapped twice: First for the $17.9 billion buyout of Clear Channel Communications in July 2008, and then for the $3.5 billion buyout of The Weather Channel in September 2008. These deals used a combined $100 million from the co-investment fund. All of Bain Capital’s subsequent deals have been too small to trigger the co-investment fund.

Bain Capital doesn’t charge management fees on uncalled capital in the co-investment fund, but expect many limited partners to jump at the chance to dump part of an unfunded commitment. If each LP takes full advantage of the offer, it would reduce the co-investment fund’s size to just $900 million. Still sizable, but nowhere near the $5 billion Bain Capital originally planned to raise for it.