- Firm: BDT Capital Partners
- Fund: BDT Capital Partners Fund II
- Target: $5 bln – $6 bln
- Amount raised: $6.2 bln
Byron Trott, known for working with Warren Buffett and other billionaire clients, recently closed his second fund at $6.2 billion, as the ex-Goldman Sachs banker aims at a longer investment period than traditional vehicles, according to a filing and a source.
Working under its internal motto of “the merchant bank of the closely held,” Chicago-based BDT Capital Partners focuses on family- and founder-led public and private companies, often with minority stakes to provide capital to entrepreneurs, according to a source.
While Trott typically declines interviews and has no website for BDT Capital Partners, he laid out some of his investment objectives at a rare appearance at Beecken Petty & O’Keefe Private Equity conference on February 19. The event was co-hosted by the University of Chicago, a school that Trott supports.
At the conference, Trott said he plans to invest for eight to 14 years, much longer than the traditional private equity hold period of five years.
“If somebody wants five-year money, we say ‘no.’” Trott said during his talk with Professor Steven Kaplan of University of Chicago, as reported by Crain’s Chicago Business. “We say: ‘There are a hundred other people in the world that can give you that money. Good luck.’”
The fact that the firm has to sell the good businesses it buys some day is “the only thing that makes me crazy,” Trott said.
BDT Capital marks the latest in a series of private equity firms delving into longer-term funds. Others include Blackstone Group, Carlyle Group and CVC Capital. Meanwhile, family-based investment groups, such as Prizker Group Private Capital, as well as some Canadian LPs, may hold companies for decades.
BDT Capital Partners Fund II wrapped up a two-part fundraising process on February 19.
The fund listed a date of first sale of June 20, 2014, according to a regulatory filing, followed by a final close at about $5 billion in October of the same year.
The fund re-opened for an additional $1 billion in capital to meet demand before wrapping up with investments from 200 LPs, according to a source and a Form D filing. The firm had always expected to raise $5 billion to $6 billion for Fund II, the source said.
Trott more than doubled the size of his inaugural fund, BDT Capital Partners Fund I, which closed on $3 billion in 2011. He launched the firm in 2009.
A spokeswoman for BDT Capital Partners declined to comment.
In one high-profile investment, BDT Capital stepped up as a minority investor in a $13.9 billion take-private of coffee making company Keurig Green Mountain Inc. BDT is working with JAB Holding Company and Mondelēz International on the deal, which was announced in December.
Elsewhere, BDT teamed up with JAB as a minority investor in the $374 million, take-private of Einstein Noah Restaurant Group, announced in 2014.
In two more recent deals, BDT Capital invested $750 million in common equity in cable TV provider Cox Enterprises Inc to help finance its Cox Automotive unit’s $4.6 billion acquisition of Dealertrack Technologies, a sales software maker for automotive inventory management. The deal was announced last year.
Last March, BDT Capital paid an undisclosed sum for a majority stake in Paducah, Kentucky-based Marquette Transportation Company Holdings LLC, a provider of inland waterway towing services and a portfolio company of KRG Capital Partners.
Along with Trott, BDT Capital’s key execs include Chairman William Bush, and co-COOs San Orr III and Dan Jester, according to a 2014 article by Fortune.
Trott was at Goldman Sachs in the 2000s when he got a chance to meet Warren Buffett, who took him on as a banker. Among his transactions for the billionaire, Trott worked on Buffett’s $5 billion investment in Goldman Sachs during the height of the financial crisis.
Trott’s previous clients also include members of the Pritzker family, the Reimann family of Austria and Charles and David Koch.
Action Item: See the Form D for BDT Capital Partners Fund II here: http://1.usa.gov/24pj0sX
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