Berkshire seeks $6.5bn for Fund XI, expected to close by summer

Berkshire Partners, one of the industry’s oldest private equity firms, set a $6.5 billion target for its 11^th flagship buyout offering.

The target was disclosed in Oklahoma Municipal Retirement Fund documents. Raising $4.7 billion as of January, Berkshire Fund XI is expected to hold a final close before the end of June, the documents said. Berkshire did not respond to a request for comment.

Rolled out late last year, the fund appears to be moving at a quicker pace than many others in a tough capital-raising environment.

Fund XI follows a seemingly more complicated fundraising for its 2021-vintage predecessor. Also targeted to bring in $6.5 billion, Buyouts reported, Fund X got as far as securing $5.8 billion, according to Berkshire’s website.

The prior flagship was in 2021 the focus of a GP-led secondaries deal, Buyouts reported. In a tender offer plus staple process, LPs in Berkshire’s eighth and ninth vehicles were given an opportunity to cash out, with the staple portion earmarked as new capital for Fund X.

Berkshire was founded in 1986 by Brad Bloom, Chris Clifford, Russ Epker, Carl Ferenbach and Richard Lubin. One of its earliest investments was Advanced Drainage Systems, a high-growth thermoplastic corrugated pipe maker held for almost 30 years, privately and as a listed company.

The Boston shop has since transitioned to leadership by a group of 30 partners, OkMRF documents said. Bloom, Clifford, Ferenbach and Lubin are today senior advisors.

How Berkshire invests

The flagship strategy emphasizes control and minority investments of $150 million-$500 million-plus in mostly North American mid-market businesses operating in consumer, healthcare, services and industrials, and technology and communications sectors.

Targets have enterprise values of $200 million-$2 billion. Along with backing the growth of family and founder-led companies, Berkshire pursues corporate carveouts, recaps, take-privates, turnarounds and other deal types.

The firm recently downplayed consumer in favor of other sectors, OkMRF documents said. Fund XI, expected to make 20-25 investments, has a target EBITDA at entry of $25 million-$75 million, with an average purchase multiple of 9.6x and an average leverage multiple of 5.2x.

Over its long history, Berkshire’s performance has been solid, reflected in a since-inception net multiple of 2x and net IRR of 28 percent as of September 2023, according to OkMRF documents. Berkshire Fund X was earning a 1.1x net multiple and a 12.4 percent net IRR.

Berkshire reports making more than 145 investments. Last year, it did five new platform deals, upping portfolio companies to 35. They include PDQ, an IT asset management software provider backed by TA Associates, and Thompson Safety, an onsite first aid, fire and life safety services provider.

Berkshire also in 2023 racked up several exits, among them natural haircare and beauty brand Mielle Organics, sold to P&G Beauty.

Along with its private equity strategy, Berkshire has a public equity arm called Stockbridge, launched in 2007.