Size Still Matters At Warburg Pincus

While rumors persist that Kohlberg Kravis Roberts & Co. is currently piecing together a massive $10 billion vehicle, rival firm Warburg Pincus basked in the mega-fund limelight yesterday after announcing that it had closed on a $2.5 billion international offering designed to act in concert with its existing $5 billion Warburg Pincus Equity Partners LP.

The new side fund, named Warburg Pincus International Partners LP, is the successor to an earlier $800 million vehicle funded back in 1997 and almost fully invested as of June of this year.

“We had originally invested all out of one fund, which had essentially dedicated about 25% to international investments,” said Bowman Cutter, managing director with Warburg Pincus. “As our international deal flow began to grow, however, we felt that we wanted to do more than the 25% we had implicitly agreed to with our limited partners. So we talked with some of our limited partners and they suggested this type of companion fund.”

The new vehicle will act only alongside its richer sibling fund, which is still just 25% dedicated to international offerings. In all, the international fund is expected to spend approximately 66% of its capital on European investments, about 25% in Asia and the remaining 8% in Latin America.

Although a list of participating limited partners was not available at press time, Cutter did say that about half of the investors were also involved in the firm?s more general fund.

“The original purpose was to give our limited partners the opportunity to dial up or dial down and a lot chose to go up,” Cutter said. “Also, with the $5 billion fund we made a big effort to go after more state pensions and a lot of them invested in that fund and the new one.”

He added that there was also a successful push to add additional international capital.

The fund held a $1.7 billion first close at the end of May, and has thus far invested approximately $110 million of its available capital. Most recently, the fund participated in a $5 million first round deal for Cashtech, a Mumbai-based company providing corporate electronic banking and cash management solutions to banks.

Like Warburg Pincus? other offerings, the international vehicle will invest in all stages of a companies life cycle ? from Series A venture deals to leveraged buyouts and recapitalizations ? and has a broad industry focus consisting of communications, consumer products and services, financial services, health-care, information technology, the Internet, media and natural resources.