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BC Partners fund closes at $8.6B

by Jonathan Braude in London | Published February 21, 2012 at 9:52 AM

British buyout heavyweight BC Partners Ltd. Tuesday, Feb. 21, announced the final close of its ninth fund at €6.5 billion ($8.6 billion). The size of the fund is 14% more than its previous vehicle, despite a tough and competitive fundraising environment, while the investor base is much broader than in previous vintages.

"It's been 18 months of hard work," said BC managing partner and investor relations head Charlie Bott.

He added that the fundraising team had identified 1,150 possible investors, targeted 919, met more than 500 and "converted" close to 200, who signed up to actual commitments.

"That's the measure of the shoe leather we used," he said.

Bott said BC Partners' consistent track record over a quarter of a century spoke in its favor. But inevitably, the firm's own commitment involved more than just time and travel - a fact reflected by the expansion of its private placement memorandum from 30 pages for the previous fund to 140 pages for BC European Capital IX.

Faced with much tougher demands from investors following the credit crunch, BC Partners offered a 5% discount on fees to investors who signed up before the first close of March 2011. It also agreed that all transaction fees payable by target companies should go to limited partners, instead of the previous model of keeping 20% of fees for the general partner.

And in a cultural shift from its previous funds, the firm decided to change the "carry waterfall" from the U.S. model of paying out carried interest deal by deal, to the European whole-fund model. In most European funds, the general partner gets its 20% payout only once the fund itself is in carry.

"We were an outlier on that," admitted Bott, adding that BC Partners was a European fund and it was clear that investors wanted it to follow the European model in future.

Of total commitments to Fund IX, which BC Partners said was oversubscribed, about 40% came from investors in North America, 30% from investors in Europe and 30% from investors in Asia and the Middle East. Investors include pension funds (37%), sovereign wealth funds (25%), funds of funds (12%) and other major institutions such as banks, insurance companies, endowments and foundations.

BC Partners' own investor relations team did most of the legwork (and raised about 99% of the commitments). However, it used placement agents for specific tasks in limited geographies, turning to Trinity Group Ltd. for approaches in Saudi Arabia and to FHG Associates for some new investors in the Netherlands.

BC Partners said the fund will seek "controlling equity positions in market leading businesses exhibiting defensive growth characteristics" in Europe.

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BC Partners fund closes at $8.6B

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