Berkshire Closes Fund VI At $1.7 Billion

Eschewing so-called ?hot money? in favor of experienced buyout fund investors, Berkshire Partners earlier this month held a $1.7 billion final close on its sixth private equity vehicle. The oversubscribed offering slightly exceeded a proposed $1.5 billion cap on LP commitments, and included $175 million worth of participation by individual Berkshire staffers.

?We didn?t lose any of our major investors, and we were able to carve out some room for a few new players,? said Kevin Callaghan, managing director with the Boston-based firm. He added that first-time investors needed to not only have some historical market savvy, but also the sort of scalability that would make the current investment meaningful while allowing for the possibility of an increased commitment the next time around.

Berkshire last raised a general fund in 1998, when it secured $880 million for Berkshire Fund V. That vehicle was later buttressed by a $175 million annex fund that was used to help Berkshire invest in deals that were off-limits due to Fund V portfolio diversity restrictions. The combined entity still has some available capital remaining, so Funds V and VI will co-invest until the former well runs dry.As for when the first deal will actually close, however, Callaghan declined to tip his hand.

?There?s no shortage of things we?re looking at, but I?m not yet sure whether any of them will close by year-end,? he said.

Overall, Callaghan said the fund is expected to invest between $300 million to $400 million annually in buyouts and late-stage growth capital deals for companies in the business services, manufacturing, retail, telecommunications and transportation spaces.

The firm is also open to looking at non-technical health and medical deals, but such activity is not expected to be heavy.

No managing directors have been added as part of the fund raising, although Berkshire?s quartet of principals are certainly hoping to receive promotions over the life of the new vehicle. The firm previously elevated three principals to the level of managing director in early 2000.

Dan Primack can be contacted at