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Hellman & Friedman plans Fund X final close this month

Fund X quickly raised the bulk of its capital from existing investors, but stayed open for last-minute commitments.

Hellman & Friedman plans a final close on its $20 billion mega-fund by the end of this month, according to documents from Massachusetts Pension Reserves Investment Management Board.

Hellman & Friedman Capital Partners X raised most of its capital quickly after launching earlier this year, as Buyouts reported, with keen interest from investors. While the fund could have done a one-and-done close as early as February, a source said it may stay open to provide LPs additional time to approve commitments.

Despite the interest, the firm chose to cap the fund at $22 billion, as Buyouts reported. This does not include investments from the firm itself. That commitment will be 6.25 percent, or a minimum of $1.25 billion, according to documents from New Jersey Division of Investment.

The fund will focus on large buyouts in North America and Europe, according to the MassPRIM documents. Its target sectors include software, financial services, business and information services, healthcare, internet and media, energy and industrials and retail and consumer.

New Jersey reported the fund plans to make 12 to 15 investments of between $400 million and $4 billion. In addition to buyouts, the firm also does corporate carve-outs, take-privates, recapitalizations and minority investments.

MassPRIM committed up to $350 million to the fund on Wednesday. It is the seventh Hellman & Friedman fund in which the pension has invested.

The fast pace of fundraising can be ascribed to the firm’s strong track record. According to New Jersey documents from March, Fund IX had a 24.1 percent net internal rate of return and a 1.09x total value to paid-in multiple as of September 30, 2020. Fund VIII had an 18.8 percent net IRR and 1.47x net TVPI, and Fund VII a 24.9 percent net IRR and 3.15x TVPI.

New Jersey will be charged a 1.5 percent management fee to start out, which it will pay until either the end of the commitment period or the activation of the firm’s next fund. Following that, it will pay a 1.25 percent fee for two years, then will step down to 1 percent for two years and finally to 0.75 percent thereafter. The fund has a 20 percent carry and no hurdle.

Hellman & Friedman declined to comment for this story.

Action Item: read the materials for the May 26 MassPRIM board meeting here.