CD&R pre-markets Fund X with potential target of at least $8 bln

  • CD&R could target at least $8 bln for Fund X
  • Fund to launch later this year or early next year
  • Firm has been a strong performer

Clayton Dubilier & Rice has been in discussions with limited partners about its next flagship fund, which could launch later this year or early next year, according to three people with knowledge of the talks.

The firm, formed in 1978, has discussed a potential target for Fund X of at least $8 billion, sources said. Other sources said the fund could be capped at $8.5 billion. All sources made clear nothing is set in stone on Fund X and no fund documents have yet been printed.

At $8 billion or more, Fund X would be a big jump from the prior fund, which can be concerning to LPs. The firm closed Fund IX in 2014 on $6.25 billion, turning down as much as $2 billion from LPs, Reuters reported at the time.

Sources said, however, that Fund X already is generating buzz because CD&R’s performance over the past few years has been strong.

Fund IX was producing a 30.02 percent internal rate of return as of Sept. 30, 2015, California State Teachers’ Retirement System performance data shows. The firm raised $5 billion for Fund VIII, which closed below target in 2009.

CD&R has about $15.4 billion under management, according to the firm’s Form ADV. Don Gogel is chairman and CEO.

In May, the firm agreed to pay about $400 million to buy hair-care-products maker High Ridge Brands from Brynwood Partners, Buyouts reported.

It also, along with Kohlberg Kravis Roberts, took U.S. Foods Holding Corp public in May in the year’s second-largest IPO at the time. U.S. Foods raised $1.02 billion in the offering, which valued the company at about $5.1 billion, including debt, Reuters reported.

Steve Gelsi contributed to this report.

Clarification: The headline on this report was changed to state more explicitly the size of the fund.

Action Item: Check out CD&R’s Form ADV:

A U.S. Foods truck is shown in San Diego on October 23, 2013. Photo courtesy Reuters/Mike Blake