Madison Dearborn holds interim close on $3 bln for Fund VII

  • Firm targets $3.75 bln with $4 bln hard cap
  • Final close expected in spring of 2016
  • Madison Dearborn “on the upswing,” says LP

Madison Dearborn Partners recently held an interim close on $3 billion for its latest flagship vehicle, two sources with knowledge of the fund told Buyouts.

The firm announced the interim close at an investor meeting in Chicago last week, sources. said. Madison Dearborn set a $3.75 billion target with a $4 billion hard cap for its seventh fund.

The firm plans to close out fundraising for Madison Dearborn VII in the spring of next year, sources said.

Madison Dearborn began raising Fund VII in the latter half of 2014, Buyouts previously reportd. The firm has worked hard to convince investors it has moved away from the large buyout strategy that hurt the performance of its $6.5 billion fifth flagship fund, a 2006 vintage that netted a 7 percent IRR and 1.6x multiple as of March 31, according to the California Public Employees’ Retirement System.

The Global Financial Crisis harmed the performance of Fund V portfolio companies. Technology retailer CDW Corp, Nuveen Investments and laboratory equipment distributor VWR International LLC accounted for roughly 45 percent of Fund V’s investment capital, Madison Dearborn Chairman John Canning said at the Buyouts Midwest conference last year.

“We’ve owned up for the mistakes made with Fund V,” Canning said, noting the firm moved away from its roots investing in mid-market companies with Fund V.

One LP who considered committing to Fund VII said the firm is “on the upswing” and that its performance improved with Fund VI, a $4.1 billion vehicle that netted a 22.8 percent IRR as of September 30, according to sources.

Madison Dearborn is based in Chicago. It raised about $18 billion across its six previous funds and has invested in roughly 130 companies.

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Photo of John Canning courtesy of Madison Dearborn Partners