Bain Capital Just Can’t Win

I don’t usually feel sorry for Bain Capital. Then again, I’m not usually sweating in the middle of May. Guess there’s a first time for everything…

Private Equity Insider today reports that investors in Bain’s tenth buyout fund are “grumbling” about the firm’s slow pace of capital deployment. From its story:

They’re especially irate about a recent lack of activity from the $10 billion vehicle, Bain Capital Fund 10. In January 2009, six months after the vehicle’s final close, Bain sent a letter to limited partners stating that it was “well-positioned to benefit from the dislocation in the credit markets.”

At the time, the fund was 27% deployed and Bain’s declaration seemed to indicate that the Boston firm would increasingly draw on investor commitments. But since then, it has deployed only $800 million more — leaving the vehicle a mere 35% drawn almost two years after wrapping up marketing.

First, a few factual points: (1) The fund is actually $10.8 billion, not including a related co-investment vehicle; (2) The fund closed in February 2008; (3) The fund today is around 37% committed, including for the SkillSoft (closed today) and Dow Styron ($700m equity check, closing by end of June) deals.

More importantly, what on earth are LPs “irate” about? At its current pace, Bain Capital will have invested the entire fund within its five-year investment period. Maybe even a bit faster if the leveraged finance markets continue to improve.

And the irony here is rich. Remember, Bain began raising Fund X just 16 months after raising Fund IX — prompting LPs to complain that the firm had invested its money too quickly. For those same LPs to now ask for Bain to speed things up makes them impossible to take seriously. So I won’t. Neither should Bain.