Firms & Funds

Madison Dearborn hits hard cap, raises $4.4 bln

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Madison Dearborn, private equity
The Chicago skyline is seen as the arctic sea smoke rises off Lake Michigan in Chicago, Illinois, January 6, 2014. A blast of Arctic air gripped the mid-section of the United States on Monday, bringing the coldest temperatures in two decades. Meteorologists said temperatures were dangerously cold and life-threatening in some places, with 0 degrees Fahrenheit (minus 18 Celsius) recorded in Chicago, St. Louis and Indianapolis. The chill was set to bear down on eastern and southern states as the day wore on. Photo courtesy Reuters/Jim Young (UNITED STATES - Tags: ENVIRONMENT CITYSCAPE) - RTX174FV
  • Chicago firm surpasses $3.75 bln target
  • GP chips in $430 mln to final close
  • Fund VII invests in Patterson Medical, Ankura Consulting

Madison Dearborn hit its latest flagship fund’s $4.43 billion hard cap, an industry source told Buyouts.

LPs like Teachers’ Retirement System of the State of Illinois and University of Michigan contributed to the $4 billion the firm sought, an Aug. 5 letter to limited partners obtained by Buyouts says.

Madison Dearborn professionals and the firm’s executive fund chipped in another $430 million to Fund VII’s final tally.

Madison Dearborn launched the fund with a $3.75 billion target in 2014, Buyouts reported. The Chicago firm held an interim close on $3 billion in November.

The new fund is slightly larger than the firm’s previous vehicle, which closed on $4.1 billion in 2010. Fund VI was netting a 23.2 percent internal rate of return and 1.7x multiple as of Dec. 31, Washington State Investment Board documents show.

Fund V, the firm’s $6.5 billion 2006 vintage fund, netted a 7 percent IRR and 1.5x multiple as of that date.

The firm attributes some of Fund V’s performance to larger deals made prior to the recession, but “we’ve owned up for the mistakes,” Chairman John Canning said at the Buyouts Midwest conference in 2014. The firm now typically invests $100 million to $400 million per deal.

Madison Dearborn has completed two platform deals through Fund VII so far, according to the letter. The firm invested $400 million in Patterson Medical, which makes rehabilitation and sports-medicine products, and $100 million in advisory firm Ankura Consulting Group.

Madison Dearborn was founded by Canning, Nicholas Alexos, Paul Finnegan, Samuel Mencoff, James Perry, Robin Selati and Tim Sullivan in 1992. The co-founders previously worked together at First Chicago.

Action Item: More about Madison Dearborn: www.mdcp.com

The Chicago skyline is seen as the arctic sea smoke rises off Lake Michigan on January 6, 2014. Photo courtesy Reuters/Jim Young