Madison Dearborn Caps Off At $6.5B

Firm: Madison Dearborn Partners

Fund: Madison Dearborn Capital Partners V

Target: $5 billion

Amount Closed: $6.5 billion

Placement Agent: Helix Associates (Intl.)

Madison Dearborn Partners recently held a $6.5 billion final close on its fifth fund, after having begun fundraising 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 back 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 originally seeking $12 billion for its latest fund, re-approached its limited partners to push its cap up to $13.25 billion. Texas Pacific Group, meanwhile, has allegedly not set a cap or a target on its fund, but published reports as to the firm’s potential haul have been continuously moving upward. TPG is currently reported to be seeking as much as $14 billion.

Madison Dearborn did not use a fund placement agent in the U.S., but did retain U.K.-based Helix Associates to solicit foreign commitments. Non-U.S. limited partners contributed less than 10% of the firm’s $4 billion fourth fund, but provided approximately 23% of the $6.5 billion fifth fund.

According to CalPERS data through Sept. 30, 2005, Madison Dearborn Capital Partners Funds I through IV have IRRs of 28.1%, 23.8%, 6.6% and 18.1%, respectively. —D.P.