The target for fund XI, which the firm began marketing in 2007, was $3.5 billion, the source said. The firm raised $3.4 billion for its 10th fund, which closed in 2006.
The firm finished 95% of the effort in the fourth quarter of 2008, but had left the pool open until the end of May to accommodate a few stragglers, the source said. Originally, New York-based Welsh Carson had discussed seeking between $4 billion and $5 billion for the pool with investors, according to the source.
The firm didn’t respond to a request for comment.
Limited partners include California Public Employees’ Retirement System, California State Teachers’ Retirement System, Canada Pension Plan Investment Board, University of Missouri and the New Jersey Division of Investment, according Thomson Reuters (publisher of PE Week). About $800 million worth of the pledges came from new investors, the source said.
Welsh Carson, which was founded in 1979, invests in the health care and information/business services sectors. Typically a control investor, the firm engages in a number of different types of transactions, including growth equity deals, buy-and-build transactions with smaller platform acquisitions, large public-to-private acquisitions and corporate carve-outs.
Fund X had posted a net IRR of 4.1% and an investment multiple of 1.10x as of Sept. 30, 2008, according to performance data from CalPERS, which made a $175 million pledge to the pool.
Describing itself as “deal-size agnostic,” Welsh Carson is known for pacing itself, having invested between $1 billion and $1.3 billion annually in each of the last six years. The firm is also very active in using add-on acquisitions to bulk up portfolio companies. Fund X’s portfolio companies have already completed 25 add-on deals, according to the firm’s website.
Fund XI is already being put to work. Its first investment was the July 2007 acquisition of a majority stake in PayCom, an Oklahoma City-based provider of online payroll services, in a deal worth $56 million. —Michael Baron