Berkshire Partners Lands First Close –

With relatively little fanfare, Berkshire Partners is in the midst of raising its sixth fund, with a target capitalization of $1.25 billion and a maximum cap of approximately $1.5 billion. The Boston-based private equity house recently held an $870 million first close, and expects to wrap up fund raising in either September or October.

Berkshire officially launched Fund VI at the end of Q1 2001, but actually began meeting with potential limited partners last year while helping start-up investment firm Greenbriar Equity Group raise a $400 million inaugural fund (see story All Aboard for Greenbriar’s Fund). Berkshire and Greenbriar each have a contractual right to invest alongside the other in transportation-based opportunities.

“We went out with Greenbriar’s partners and introduced them to a lot of our LPs and helped validate their strategy,” explained Garth Greinmann, managing director with Berkshire. “We also met a lot of new parties during that process, and a number of them told us to contact them when Berkshire decided to raise a new fund… If you combine those people with our existing LPs, we haven’t really had to do too much fund raising this time around.”

Greinmann declined to disclose any participating LPs, although he did note that for the first time in Berkshire’s history, international institutions were well-represented among the traditional mix of university endowments, pension funds and private foundations.

Berkshire last raised a general fund in 1998, when it closed on $880 million for Berkshire Fund V. That vehicle was later complemented by an annex fund of approximately $175 million, which was used to help Berkshire participate in a handful of deals that portfolio diversity restrictions would have otherwise barred it from doing. The combined fifth fund still has some dry powder left in the bank, and will co-invest equally with Fund VI until the former is tapped out.

Staying Constant

Greinmann said he does not expect to need an annex fund this time around, and that the investment strategy of Berkshire Fund VI will mirror that of its predecessor by mostly taking controlling positions in transportation, telecom, retailing, growth manufacturing and business services companies. It will also continue to spread its geographic wings outside of the Massachusetts box with which it has been historically associated.

Most recently, Berkshire has been involved in transactions for Morrow, Ga.-based apparel retailer The William Carter Co. and Silver Springs, Md.-based telecom infrastructure firm CityNet Telecommunications Inc.