New York — Bain Capital raised $9.4bn for its next North American buyout fund in about five months, a person with knowledge of the matter said, the latest private equity firm to reel in more than it sought amid a fundraising spree.

Bain surpassed its $7bn target and hit its $8bn hard cap, the maximum amount of outside capital allowed by its agreement with investors, said the person, who asked not to be identified because the details were private. Employees of the Boston-based firm put in $1.4bn, or 15%, the person said — a bigger contribution than peers that’s typical of Bain’s funds.

A spokesperson for Bain declined to comment on fundraising.

While the pool, Bain’s 12th for North America, is bigger than its predecessor fund by almost a third, the firm sized it smaller than those managed by peers. TPG, KKR and Carlyle have larger funds for the region, and Apollo Global Management finished gathering $24.7bn in 2017 for the biggest global pool ever managed by a buyout firm.

Private equity firms have been on a fundraising tear as yield-hungry investors reach for better returns. Near-record inflows are going to fewer firms, sending fund sizes such as Apollo’s to new heights.

Silver Lake sealed $15bn in April, breaking the record for technology-focused pools. The previous month, KKR closed on $13.9bn for its latest North American buyout fund, the biggest for a pool focused on the region.

Operating DNA

The capital influx has in part boosted asset prices, forcing firms to get wiser in order to find bargains. John Connaughton, Bain’s co-managing partner, said the firm was finding deals with founder-led companies it could scale, such as Canada Goose Holdings. It’s also looking for businesses it can combine with existing portfolio companies, such as Epic Health Services and PSA Healthcare, as well as companies that can expand in destinations such as China, where Bain has been for over a decade.

Its DNA in operating expertise — the firm was founded by Mitt Romney and other consultants from Bain & Co in 1984 — has become especially valuable as asset prices rise and the private equity industry relies less on leverage for juicing returns, Connaughton said in a phone interview.

"You cant just have a vertical, you cant just have an operations group," he said. "You really have to have a set of capabilities to act like a strategic acquirer, and not all firms have that orientation. We’re trying to drive much deeper."

Leadership changes

Bain finished gathering $7.3bn for its 11th fund, including $800m from the firm and employees, in 2014. The pool was generating a 30% annualised return after fees as of the end of 2016, ranking in the top quartile of comparable funds, according to data compiled by Bloomberg. Its 10th pool, which got more than $10bn in 2008, had a 9.2% rate of return as of March 31, the data show.

Bain manages about $80bn across private equity, credit, public equity and venture capital. In 2016, the firm named Connaughton and Jonathan Lavine as co-managing partners overseeing its day-to-day operations, and Josh Bekenstein and Steve Pagliuca became co-chairpersons. It also renamed its hedge fund and credit divisions to include "Bain Capital", a re-branding that the firm said reflected its expanding global operations.

While his role has grown, Connaughton said he still spent the same amount of time on dealmaking and leading Bain’s private equity business.

"What didn’t need to change didn’t change, and what was already working continues to work," he said of the new structure. "But it allows us to take to the next level the ability to integrate capabilities across business units and provide opportunities for growth for some of our people."


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