MDP Nears Half-Way Mark To $10B

Firm: Madison Dearborn Partners

Fund: Madison Dearborn Partners VI LP

Target: $10 billion

Amount Raised: $3 billion

Madison Dearborn Partners, the Chicago shop seeking to join the double-digit billion-dollar fund club, will soon hit the half-way mark toward its goal of $10 billion, a source familiar with the effort told Buyouts.

Within the next month, the firm plans to close on $5 billion for Madison Dearborn Partners VI LP, our source said. The LBO shop will likely keep the fund open through the end of the third quarter to accommodate several long-standing limited partners that must wait a few months before they can commit to the new vehicle, our source said.

Earlier this month, the LBO shop held a first close on $3 billion. Madison Dearborn Partners kicked off this round of fundraising in November but didn’t hit its stride until the start of the year, according to our source.

That might explain in part why the firm’s fundraising pace for Fund VI hasn’t matched the speed with which it’s raised prior vehicles. Speed, too, is also a factor in another sense: Madison Dearborn Partners closed on its fifth fund, a $6.5 billion pool, only two years ago and is coming back to market without having time to prove the success of that fund, sources have told Buyouts. Indeed, the biggest commitment from that fund—to cover Madison Dearborn Partners’s contribution to the $52 billion take-private of Canadian phone company BCE—is still pending.

In addition, the firm has entered a choppy fundraising market. Public pension funds, the ones that can afford to make big-dollar commitments to mega-firms, are butting up against their allocation ceilings. The value of their overall portfolio, including public equities and fixed-income holdings, has decreased in the bear market, shrinking the size of their allocation to alternative assets, which is typically set as a static percentage of the entire portfolio.—J.H.