Clayton Dubilier & Rice, one of the world’s oldest private equity firms, is cruising toward the close of its 12th flagship buyout offering, sources told Buyouts.
As of December, CD&R had raised $15 billion for Clayton, Dubilier & Rice Fund XII or three-quarters of its $20 billion target, sources said. The vehicle is expected to wrap up in the spring of 2023.
Fund XII arrived in the market just over a year after its 2021-vintage predecessor closed at nearly $16 billion. At $20 billion, it would be 26 percent larger than Fund XI.
In a challenging market, overallocated LPs are pushing back on accelerated GP fundraising and step-ups in ticket sizes. Big, brand-name sponsors like CD&R nonetheless retain an edge over others because of greater investor emphasis on re-ups with incumbents.
In the case of CD&R, LP backing also owes to its operational bona fides, sources said, including “an ability to manage portfolio assets in tough times.”
CD&R was founded in 1978 by Eugene Clayton, Martin Dubilier and Joseph Rice. It is today led by CEO Nathan Sleeper, who joined in 2000 from Goldman Sachs’ investment banking division, and co-presidents David Novak and Richard Schnall. Sleeper, Novak and Schnall took on their leadership roles in 2020.
CD&R’s strategy is focused on upper-mid-market and large value-oriented buyouts and build-ups in North America and Western Europe. Target opportunities are often businesses at a strategic inflection point, businesses poised for high-growth or industry consolidation, and complex divestitures.
Core sectors of interest are business services, consumer and retail, financial services, healthcare, industrials and technology. Financial services is a new area of specialization, for which CD&R this year hired David Winokur, an ex-managing director with TowerBrook Capital Partners.
Keen on large-caps
In marketing documents seen by Buyouts, CD&R identifies itself as one of about 20 GPs with the capacity to finance deals at the market’s large end. Capitalization levels in the space are rising, it noted, with the average check size doubling in Fund XI relative to the previous three flagships.
Despite economic uncertainty and volatility, the firm has been investing at a steady clip since January. In total, $4.1 billion has been deployed across five platform and two add-on acquisitions, sources said.
Among the platform deals is CD&R’s agreement to carve-out Roper Technologies’ industrial businesses, including its process technologies segment and assets in its measurement and analytical solutions segment. The purchase price is $2.6 billion.
CD&R later in the year completed its acquisition of Gentiva Health Services, formerly Humana’s hospice and personal care units, for $2.8 billion. And in November, it announced an agreement to invest with Greenbriar Equity Group in the merger of Paradigm Precision and Whitcraft, creating a new aviation engine components maker.
As of March, Clayton, Dubilier & Rice Fund X was earning a 2.3x net multiple and a 47.7 percent net IRR, according to California Public Employees’ Retirement System. No results were available for Fund XI.
Sleeper, Novak and Schnall oversee a team of 240 professionals located in the firm’s offices in New York and London. Senior team members include 35 partners. Recent additions are Winokur as well as Harsh Agarwal, Romain Dutartre and Robert Volpe, who were promoted this month.
CD&R declined to provide a comment on this story.