Freshly minted BDT & MSD closes flagship fund at $14bn

BDT & MSD Partners, formed last year in a merger, raised $14 billion in the close of a fourth flagship private capital offering, sources told Buyouts.

The Chicago shop, a family and founder-oriented merchant bank, wrapped up BDT Capital Partners Fund 4 this month, ahead of a $13 billion target, sources said. The vehicle secured the bulk of the capital last fall, Buyouts previously reported.

Some 157 LPs committed to the fund, sources said, 97 percent of them family business owners, founders, their family offices and charitable foundations. BDT & MSD is the single largest investor.

Fund 4’s close comes exactly one year after BDT & Company, launched in 2009 by former Goldman Sachs investment banker Byron Trott, joined with MSD Partners, which invests on behalf of the family of Dell Technologies founder Michael Dell and others.

The resulting BDT & MSD draws on the philosophies of the two founding organizations, emphasizing the idea of creating alignment by deploying family and founder-sourced capital to family and founder-led businesses. The flagship strategy makes minority investments in such companies in North America and Europe.

This aspect of the strategy is seen in recent deals, such as last year’s €2.63 billion ($2.88 billion) investment in IMA Group, a designer and manufacturer of automatic packaging machines, majority owned by the Vacchi family. BDT & MSD acquired the stake held by BC Partners.

Another key aspect is long-duration investing, which borrows from the pioneering deals of Trott’s BDT & Company. Hold periods are beyond the traditional private equity horizon of three to five years, with prior BDT funds investing over eight to 13 years, sources said.

To date, Fund 4 has completed eight investments, among them IMA, sources said.

BDT & MSD, which also features private credit and real estate strategies as well as advisory services to families and founders, is run by co-CEOs Trott and Gregg Lemkau, the former head of MSD. Trott is also the chairman. President Dan Jester, formerly with BDT, oversees private capital investing with Trott.

BDT & MSD’s private capital strategy, including funds raised alone by BDT, has invested or committed about $40 billion across 52 companies, sources said. Ninety percent of the businesses are family and founder-led.

Fund 4 is 54 percent larger than the $9.1 billion raised by BDT’s last flagship vehicle, BDT Capital Partners Fund 3, closed in 2020.

The firm declined to provide a comment on this story.