Likely in part through the result of sweetened fund terms and conditions, London-headquartered BC Partners has capped 18 months of fundraising with a final close on €6.5 billion for BC European Capital IX.
There were several changes in terms from that fund to those in BCEC IX, with transaction fees moving from a 80:20 model to 100:0, meaning all transactions fees are rebated to investors.
The new fund has also moved to a European-style waterfall, meaning carry is only paid out once all the committed capital is returned to LPs and a hurdle is reached.
A source close to the process said BC had been very focused on governance and transparency issues with this fundraising, and had fully embraced ILPA guidelines.
The fund, which exceeded its target of €6 billion and met its hard cap, is the largest to be launched and closed in Europe since the collapse of Lehman Brothers, BC claims.
Other funds to close post-Lehman include CVC European Equity Partners V (€10.75 billion in 2009); First Reserve Fund XII ($8.8 billion in 2009); and Hellman & Friedman Capital Partners VII ($8.8 billion in 2009). Only Hellman's fund was launched post-Lehman, however.
Charlie Bott, head of investor relations and a managing partner at the firm, said the key to the fundraising had been generating early momentum.
The early-bird discount … generated priceless early momentum. We have no regrets and would do it again in a flash
Charlie Bott, BC Partners
“If you think back two years, no-one had raised a big fund since the collapse of Lehman. With the early-bird discount [a 5 percent reduction in fees] we offered, we gave LPs a reason to commit ahead of the first close, which generated priceless early momentum. We have no regrets about the discount and would do it again in a flash,” Bott said.
The fund, which was oversubscribed, was 14 percent larger than BC’s previous fund which garnered €5.8 billion in 2005.
BC said 40 percent of the capital came from North American LPs, with European investors contributing 30 percent, and those in Asia and the Middle East accounting for the remaining 30 percent. Pension funds committed 37 percent of the capital, sovereign wealth funds 25 percent, funds of funds 12 percent, and a range of other institutional investors the remainder.
A “large majority” of existing LPs in BC’s funds re-upped, according to Bott.
It was a huge team effort
Charlie Bott, BC Partners
The fund was raised almost entirely by BC’s eight-person in-house investor relations team. “It was a huge team effort,” Bott said. “All the investment professionals gave up whatever time we asked of them to help out, as did the finance team.”
Two external placement agents were used to source capital from Saudi Arabia and the Netherlands, but those commitments represented just one percent of the total fund size, a source said.
On the legal side, moves by key personnel at Clifford Chance, given the original mandate, meant that Weil Gotshal and Simpson Thacher & Bartlett also became involved in the fundraising.