Madison Dearborn Partners LLC's efforts to dive into the deep end of the leveraged-buyout pool may be coming up a bit short, as the firm reportedly has scaled back the target for its latest fund to $7.5 billion, from $10 billion, according to Dow Jones'
Private Equity Analyst.
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Issues about Madison Dearborn's ability to reach its initial target
arose months ago as the firm's limited partner base began questioning
the size of the fund and whether a vehicle that was 54% larger than its
predecessor could be invested in an environment where leveraged debt
has disappeared. In July, The Deal's Christine Idzelis wrote about potential fundraising issues for the vehicle.
In mid-April, [Madison Dearborn] made a first close of
around $4 billion, a source said, with most of its existing limited
partners investing. Other sources, however, have suggested fundraising
has not gone as smoothly as might have been anticipated, owing to
concerns from some investors that the firm appears to have invested an
earlier fund, a $6.5 billion pool raised in 2006, at a rapid pace and
at the peak of the market.
While $7.5 billion is no small sum, Madison Dearborn's decision is
further evidence of the trouble even top-name firms are having in
closing new megafunds in light of the slowdown in private equity dealmaking. Even top-tier buyout shop Kohlberg Kravis Roberts & Co. has seen
two funds fall short
of the goal this year. A domestic fund closed with $17.6 billion in
April, just short of the $18 billion it had hoped to raise; and a
European fund is expected to finish with only $7 billion well below
the original $10 billion target. - George White
See story from Private Equity Analyst via Deal Journal
See story about Madison Dearborn from TheDeal.com
See story about KKR funds from Dealscape
