Madison Dearborn Lowers Fund Expectations

We’ve talked a lot about fundraising woes in the mega-markets, including problems for such brand-names as Blackstone Group and Clayton, Dubilier & Rice. But we’ve focused the most of Madison Dearborn Capital Partners, which has been trying to secure $10 billion for its sixth effort.

Well, no longer. As LBO Wire first reported this morning, the Chicago-based firm has lowered its target to $7.5 billion. That’s still a bit higher than would be the preference of certain LPs, but is a reasonable cut given how the market has continued to deteriorate since MDCP first hit the fundraising trail last year. The firm so far has closed on just over $4 billion, including increased allocations from endowments like Yale.

So can it hit the $7.5 billion mark by early next year, as it expects to do? Probably. First, it’s gotten a boost from the recent BCE financing agreement, which virtually guaranteed the deal’s closure and reduced its EBITDA multiple from 7.5x to 6.9x. More importantly, Madison Dearborn so far this year has distributed $1.8 billion to LPs (most of which came from Intelsat) – and it may well top its own record of $2 billion set in 2005.