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Berkshire Partners eyes $5.5 bln for Fund IX

  • Firm closed previous fund in 2011
  • In talks with LPs about a $5.5 bln target
  • Not clear when fund will officially launch

Berkshire Partners is talking to limited partners about its next flagship fund with a target of $5.5 billion, according to two LPs who have heard the pitch.

It’s not clear if Fund IX is officially in the market; however, the firm expects a first close in December and a final close in February, one of the LPs said. Courtney Stephens, a spokeswoman for the Boston-based firm, declined to comment.

“Good track record, stable team, stable strategy,” said the second LP.

Berkshire closed its last fund on $4.5 billion in 2011. Fund VIII generated a 6.54 percent internal rate of return and a 1.11x multiple as of June 30, according to performance information from alternative assets data provider Bison.

Fund VIII had a “tiered carry structure” by which the GP would receive a premium 25 percent carried interest if the fund hit certain benchmark, Buyouts previously reported. To attain the premium carry, Fund VIII had to perform in the top quartile. The firm’s seventh fund had a flat, 25 percent carry rate, Buyouts reported.

It’s not clear if Fund IX will continue with a tiered carry structure.

Team stability has long been a hallmark of Berkshire. Since the firm’s founding in 1984, it has lost very few managing directors. One founding managing director, Russell Epker, retired in 2000. Founding Managing Director J. Christopher Clifford stepped back from daily management and into an advisory role in 2008. Carl Ferenbach, a founding managing director, retired in 2012.

Another managing director, Garth Greimann, became Berkshire’s chief administrative officer in 2006 and is stepping into an advisory role this year, according to the firm’s website.

Earlier this year, Berkshire promoted three people to managing director: Dave Bordeau, who joined in 2006, Marni Payne, who joined in 2000, and Raleigh Shoemaker, who joined in 2006.

Berkshire targets middle-market investments in consumer products and retail, business services, industrials, transportation and communications.

In October, Berkshire agreed to buy a majority of Affordable Care Inc from American Capital Equity. Reuters said the deal was valued at more than $800 million.

Photo of Berkshire Mountains courtesy of ShutterStock