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CSFB closes $5 billion fund

CSFB Private Equity has closed its DLJ Merchant Banking Partners III Fund at $5.4 billion. The Donaldson, Lufkin & Jenrette team, led by Tom Dean and Lawrence Schloss, started raising the fund in the spring of 2000 and held an initial closing in August 2000 at around $3 billion. Fund raising was then suspended when CSFB announced its acquisition of DLJ. The integration of DLJ and CSFB’s private equity activities was completed by the beginning of 2001 and fund raising resumed in March.

The last DLJ Merchant Banking Partners fund raised $3 billion in 1996 and has been invested in 46 companies. In size, the new fund is second only to US-based Thomas H. Lee Equity Partners V, which raised $6.1 million. Other funds in the same league include KKR’s current vehicle and Blackstone Capital Partners IV, which held a $4 billion first closing last month. In Europe CVC raised e4.65 billion, BC Partners EURO4.2 billion and Apax e4 billion.

Lawrence Schloss, global head of Credit Suisse First Bostons’s private equity group and chairman of the new fund, described the group’s expanding private equity franchise as the crown jewel in the $26 billion tiara of alternative assets it has under management.

The third DLJ Merchant Banking Partners fund has a global investment remit, concentrating on North America and Europe. Sectors it will focus on include industry, healthcare, energy, media communications and financial institutions. The fund’s investment mandate includes traditional leveraged buyouts (50 per cent to 60 per cent), growth capital (10 per cent to 15 per cent), structured equity securities, such as preferred stock and warrants (10 per cent to 15 per cent) and minority stakes (10 per cent to 15 per cent). It has already invested $1.5 billion, or 25 per cent of the fund’s capital, in European deals including Gala Group, Louis Dreyfus Communications and Frontier Drilling.

Tom Dean, head of CSFB’s leveraged corporate private equity and managing partner of the fund, said: “We are especially excited about opportunities in Europe, where in the past year we have invested $275 million and expect to invest an additional $800 million.”