Warburg Pincus LLC said on Monday it amassed $12 billion for its latest private equity fund, its biggest since the 2008 financial crisis and its first generalist fund since ex-U.S. Treasury Secretary Timothy Geithner became its president last year.
Dubbed Warburg Pincus Private Equity XII, the new fund completed fundraising in just six months, a relatively short period by industry standards. It was also significantly oversubscribed, the firm said.
Warburg, which manages more than $40 billion in private equity assets, differs from many of its rivals in that, apart from piling debt onto acquired firms in leveraged buyouts, it also makes venture capital and growth equity investments.
Such investments require little or no debt and allow it to deploy capital when leveraged buyouts are too expensive, which some private equity executives argue is the case currently, partly due to a run-up in the stock market in the past two years.
Investors in Warburg’s latest fund include public and private pension funds, sovereign wealth funds, insurance companies, endowment funds, foundations and wealthy individuals, the private equity firm said in a statement.
A number investors are from outside the United States, it said.
The fund will invest in the energy, financial services, healthcare and consumer, industrial and business services and technology, media and telecommunications sectors, Warburg said.
People familiar with the matter told Reuters in May that New York-based Warburg Pincus was seeking to raise a new $12 billion global fund, just two years after amassing a $11.2 billion fund.
Warburg’s successful fundraising defied a challenging environment for private equity firms as investors grow increasingly concerned about these funds’ ability to generate lucrative returns ahead of expected interest rate hikes by the Federal Reserve.
Private equity funds that completed fundraising in the third quarter of 2015 raised $116.9 billion, down from $129.3 billion in the previous quarter, the third consecutive quarterly decline in fundraising, according to market research firm Preqin.
Warburg’s previous global private equity fund, Warburg Pincus Private Equity XI, which launched in 2011 and raised $11.2 billion, generated a net internal rate of return 20.8 percent as of the end of June, according to New Mexico Educational Retirement Board, a public pension fund investor.
By comparison, New Mexico Educational Retirement Board’s entire private equity portfolio averaged a net internal rate of return of 13.4 percent over the same period.
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