Warburg Pincus XII on track for Q4 final close

  • Firm targets $12 bln for Fund XII
  • Offers LPs 1.4 pct management fee during investment period
  • Fund XII to have broad mandate for deal size, geography

Should it hit its $12 billion target, Warburg Pincus Private Equity Fund XII would be the firm’s second largest fund to date, dwarfed only by the $15 billion Fund X closed in 2007.

The Verus memo recommends that Fresno County make a commitment to Fund XII, citing the favorable investment terms and a broad investment mandate that would give the $4 billion pension exposure to deal sizes ranging from early-stage venture capital to large buyouts.

As with previous funds, Fund XII would invest across a wide spectrum of companies and geographies. Fund X’s portfolio included a $631.9 million equity investment in U.S. eye care company Bausch & Loam, which was acquired via a $4.5 billion leveraged buyout, as well as a Series B financing for Chinese online advertising service 58.com Inc, according to the memo.

Fund X netted an 8.8 percent internal rate of return and 1.5x multiple through March 31, according to the Verus memo. Fund XI, an $11.2 billion 2012 vintage fund, has so far netted a 20.7 percent IRR and 1.3x multiple as of the same date.

Terms considered favorable

As for the terms, LPs would pay a 1.4 percent management fee during the fund’s six-year investment period, according to the investment report. The management fee falls to 1.25 percent for the next two years, then falls again to 1 percent through the end of the fund’s life.

The general partner intends to provide at least a $300 million commitment to Fund XII, according to the memo, and will not invest more than 15 percent of Fund XII’s capital in any single portfolio company without the approval of its advisory board.

Fund XII LPs would pay up to $6 million of “organizational expenses”, according to the memo. The fund also would bear the cost of any professional and direct operating expenses on top of what’s covered by the management fee. 

Warburg Pincus declined to comment.