Exclusive: Warburg tops $5 billion mark for fund: sources

Thu May 10, 2012 3:57pm EDT
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By Greg Roumeliotis and Paritosh Bansal

NEW YORK (Reuters) - Warburg Pincus LLC has raised more than $5 billion in just over seven months for its 11th global private equity fund, a major step on the way toward its $12 billion target, people familiar with the matter said on Thursday.

Warburg Pincus Private Equity XI is the second-largest buyout fund globally by capital targeted that is currently tapping investors for money, behind Blackstone Real Estate Partners VII, which is targeting $13 billion.

Mega-buyout funds have struggled with a tough fundraising environment as their returns have been hit by tighter financing conditions. But Warburg markets its offering differently, focused on growth investing rather than the usual financial engineering by leveraged buyouts.

About 50 investors, both existing and new, participated in the first fundraising close, which marked the securing of the commitments and took place in early May, the sources said. They included public and corporate pension funds, endowments and sovereign wealth funds.

The firm has identified opportunities to put some of the capital to work immediately, they added.

Warburg Pincus declined to comment.

The fundraising environment remains tough for private equity, with 23 funds raising an aggregate $18.5 billion in the first quarter of 2012 and taking an average of 20.9 months to fundraise, topping the previous average high of 20.4 months for funds closing in 2010, according to market research firm Preqin.

Warburg is offering investors a headline management fee of 1.4 percent and carried interest - the share of fund profits that go to the firm - of 20 percent, the sources said. Big investors may be charged a 1.3 percent management fee.   Continued...