Madison Dearborn Partners has held a $6.5 billion final close on its fifth fund, after having begun fund-raising last November with a $5 billion target.
The Chicago-based firm does not plan any changes to its investment strategy, which involves management buyouts and structured growth transactions that include equity checks of between $50 million and $600 million.
Madison Dearborn typically tries to avoid large club deals, although it is reported to be part of a large consortium that is bidding on Spanish-language broadcaster Univision.
“Our limited partners – particularly the endowments – really wanted us not to go past the $6.5 billion cap we had set in November,” says a source within the firm. “We’re not pursuing the same strategy as a Blackstone Group or Texas Pacific Group, so we didn’t feel any pressure to raise that kind of money.”
Blackstone, after seeking $12 billion for its latest fund, approached its limited partners again to push its cap up to more than $13 billion.
Texas Pacific Group, meanwhile, has allegedly not set a cap or a target on its fund, but talk of the firm’s intentions have been continuously moving upward. TPG is currently believed to be seeking as much as $15.2 billion.
Madison Dearborn did not use a fund placement agent in the United States, but did retain U.K.-based Helix Associates to solicit foreign commitments. Non-U.S. limited partners provided nearly 25% of the $6.5 billion fifth fund, but contributed less than 10% of the firm’s $4 billion fourth fund.
Madison Dearborn Capital Partners Funds I through IV have IRRs of 28.1%, 23.8%, 6.6% and 18.1%, respectively, according to investment data from the California Public Employees’ Retirement System through Sept. 30, 2005.