BC Partners Tops Views With Fund

British buyout firm BC Partners raised €4 billion ($5.6 billion) for a new fund, beating expectations in a tough fundraising environment, people familiar with the situation told Buyouts sister wire service Reuters. The company told its investors it held a first close, the people said.

As one of the first major European buyout firms to attempt to raise fresh capital since the credit crisis, BC Partners has been seen by many in the industry as a bellwether for private equity fundraising markets. The firm, which owns Fitness First gyms and Turkish supermarket group Migros, drafted former Goldman Sachs banker Charlie Bott in 2009 to spearhead its fundraising efforts.

The amount exceeds the €2.5 billion to €3 billion that sources had previously expected the firm to raise at first close. It represents about two thirds of the total €6 billion the firm is seeking for its ninth buyout fund. However, BC Partners has made some concessions to entice investors into the fund. It has given investors who committed to the fund before first close a 5 percent discount on management fees and the 20 percent performance fee it charges.

BC Partners is also changing the way it earns those performance fees. It will only pay out bonuses to staff when the whole fund has returned investors all their money and cleared a hurdle—typically an 8 percent return.

The firm is unlikely to be deploying the new fund immediately as it still has enough capital to do at least one more deal from its €5.9 billion fund raised in 2005. BC Partners expects to hold a second close on the new fund in June and a final close before the end of the year, people familiar with the matter told Reuters.

The fundraising market has become tougher and the time taken to raise capital has grown longer as investors have reduced the number of firms they invest with and how much they put with their preferred managers. A number of other private equity firms, including Cinven and Sweden’s EQT, are seen raising new multi-billion dollar funds in 2011. Apax Partners is also expected to be back for a new fund of around €11 billion by the end of the year, people familiar with the situation have said.

Simon Meads is a Reuters correspondent in London. Philipp Halstrick also contributed to this report.