CD&R Launches Fund IX At $5 Billion

Firm: Clayton Dubilier & Rice

Fund: Clayton, Dubilier, and Rice Fund IX LP

Target: $5 billion


Clayton Dubilier & Rice has officially begun fundraising for its ninth pool, three sources told sister Web site peHUB. New York-based CD&R has a $5 billion target for the fund, the persons said. CD&R sent out private placement memos in February, one source said.

However, one placement agent said the buyout firm is “moving into full formal launch this month,” the person says. CD&R will begin speaking to all potential investors, not just its existing lineup of LPs, the source said.

Bloomberg News reported in November that CD&R would target $5 billion for its Clayton, Dubilier, and Rice Fund IX LP. CD&R will provide at least $250 million in GP commitment to Fund IX, Private Equity International reported.

CD&R’s eighth fund, which closed in late 2009, also collected $5 billion. Fund VIII has a gross IRR of 31 percent and a net IRR of 18 percent as of Dec. 31, one of the sources said.

Founded in 1978, CD&R invests in several industries including consumer, retail, industrial and distribution. The firm’s most recent exit occurred in February when Cardinal Health said it would buy AssuraMed for $2.07 billion, including $1.3 billion in debt. CD&R and GS Capital Partners LP acquired AssuraMed, which was known as HGI Holding, in October 2010. The investment came from CD&R Fund VIII. The transaction was valued at $850 million, according to news reports from that time. CD&R and GS Capital contributed combined $433 million equity at the time, according to Moody’s Investors Service.

CD&R and GS Capital received some of their equity back in October when AssuraMed raised $760 million in new loans. The company used the debt to pay a dividend to its sponsors and refinance existing debt, Moody’s said. It’s unclear how CD&R did on AssuraMed but the transaction was notable, peHUB has learned.

Another exit occurred last year. In July, CD&R sold its entire remaining stake in Sally Beauty. The firm made 3.4x its money on Sally Beauty, which generated a 26 percent IRR, peHUB has reported. However, CD&R made the investment in Sally from its seventh fund, which raised $4 billion in 2006.

CD&R also sold Diversey Holdings in October 2011 in a deal valued at $4.3 billion. The deal produced a roughly 60 percent IRR for CD&R and a 2.5x cash-on-cash return, peHUB reported at the time. Diversey Holdings came from CD&R’s Fund VIII.

A CD&R official declined comment.

Luisa Beltran is a senior writer for peHUB.