CD&R raises largest fund in firm history: $9.4 bln Fund X

  • Fund X hits $9.4 bln, half again as large as prior fund
  • Launched in October; not yet activated, source says
  • Subject of heavy buzz; saw significant LP demand

Clayton Dubilier & Rice has closed the largest fund in its near four-decade history, reaching $9.4 billion for Fund X, according to a market source.

Update: With a 6 percent GP commitment to the fund, the total for Fund X was $10 billion.

Fund X launched in October and saw about $20 billion of demand, the source said. More than 90 percent of existing limited partners committed to the new fund, the source said.

Fund X has not yet been activated, the source said.

The fund came in more than half again as large as CD&R’s prior vehicle, which closed on $6.25 billion in 2014. CD&R was formed in 1978.

Fund X had been generating buzz in the LP community because of CD&R’s recent strong performance. Fund IX was producing a 24 percent internal rate of return since inception as of Sept. 30, 2016, California State Employees’ Retirement System performance information shows.

The effort was driven by some recent exits that all tallied around 5x returns for CD&R. Those deals included a $1.8 billion secondary stock offering in 2015 by Envision Healthcare, priced at $36.25 a share, 58 percent above Envision’s 2013 IPO price of $23. CD&R also sold PharMEDium Healthcare Holding for about $2.6 billion, including debt, to drug wholesaler AmerisourceBergen in 2015.

The other about-5x exits were the sale of U.S. refrigeration firm Hussmann to Panasonic for more than $1.5 billion and a partial realization in the IPO of SiteOne Landscape Supply last year.

In anticipation of the larger fund, CD&R named four partners earlier this year: Sarah Kim and Derek Strum, who focus on healthcare; Stephen Shapiro, on services, and J.L. Zrebiec, on industrials.

Update: CD&R is owned directly and indirectly by senior executives of the firm, along with Joseph Rice and Donald Gogel. Profits are distributed broadly among senior professionals based on specified sharing percentages, according to CD&R’s Form ADV.

Update: This story was updated to indicate the GP commitment was not part of the $9.4 bln external investor total, as well as information about ownership of the firm.

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