Firms & Funds

Welsh Carson hits $3 bln target on Fund XII

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Russell L. Carson, Co-founder and General Partner of Welsh, Carson, Anderson & Stowe speaks after receiving the Columbia Business School Distinguished Leader in Business award at the the Waldorf-Astoria in New York City, May 5, 2008. REUTERS/Joshua Lott (UNITED STATES) - RTR2091E
  • Firm: Welsh, Carson, Anderson & Stowe
  • Fund: Welsh, Carson, Anderson & Stowe XII
  • Target: $3 bln
  • Hard cap: $3.5 bln
  • Amount Raised: $3 bln
  • Placement Agent: Asante Capital Group
  • Legal Counsel: N/A

Welsh, Carson, Anderson & Stowe held an interim close on its 12th flagship fund’s $3 billion target last week, two sources told Buyouts.

The firm will keep Welsh, Carson, Anderson & Stowe XII open through the first quarter of 2016 as it approaches its $3.5 billion hard cap, said one market source, who noted the firm held several interim or “rolling” closes over the past year.

Limited partners in Fund XII include the California Public Employees’ Retirement System, Minnesota State Board of Investment and Greenwich, Connecticut’s retirement system.

Fund XII held a first close on $1.7 billion about a year ago, Buyouts previously reported.

Welsh Carson will charge Fund XII LPs a 1.5 percent management fee on total capital commitments during the fund’s six-year investment period, according to a NEPC memo in Greenwich’s meeting materials. After six years, the fee falls to 1 percent of invested capital. The GP commitment will be the lesser of $175 million or 5 percent of Fund XII’s total commitments.

Welsh Carson expects Fund XII to fund a portfolio of 20 to 25 companies. Its investment strategy can pursue traditional buyout, opportunistic and growth deals, according to the NEPC memo. The firm will invest at least $50 million of equity per deal and has the ability to commit as much as $1 billion to a transaction with LP co-investors.

The firm is already investing Fund XII, according to its website. In September, it acquired clinical services company Emerus Holdings for an undisclosed amount. The New York-based firm also invested in service provider Simeio Solutions to assist its expansion into new geographies.

Welsh Carson’s previous fund, a $3.9 billion 2009 vintage, netted a 15.1 percent internal rate of return and 1.5x investment multiple as of June 30, according to CalPERS.

Action Item: Read NEPC’s report on Welsh Carson here: http://bit.ly/1QYhzgj

Photo: Russell L. Carson, Co-founder and General Partner of Welsh, Carson, Anderson & Stowe speaks after receiving the Columbia Business School Distinguished Leader in Business award at the the Waldorf-Astoria in New York City, May 5, 2008. REUTERS/Joshua Lott