Clayton Dubilier Said to Near $5 Billion Goal for Buyout Fund

Dec 23, 2013 1:25 pm ET

Dec. 23 (Bloomberg) -- Clayton Dubilier & Rice LLC, one of the industry’s oldest private-equity firms, is nearing the $5 billion goal on its ninth investment pool, according to a person familiar with the matter.

Clayton Dubilier & Rice Fund IX LP gathered almost $4.9 billion in its second phase of fundraising, which includes a $250 million commitment from New York-based Clayton Dubilier, said the person, who asked not to be identified because the information is private. The firm expects the fund to hit its $6 billion limit in the first quarter of 2014, the person said.

Clayton Dubilier, which specializes in buying unwanted or underperforming divisions of larger corporations, is competing for capital as a record 1,990 private-equity funds were seeking a combined $721 billion as of the start of October, according to London-based research provider Preqin Ltd.

Tom Franco, a spokesman for Clayton Dubilier, declined to comment on fundraising.

Clayton Dubilier returned $3.4 billion in capital to investors this year, according to the person. The firm in March sold AssuraMed to Cardinal Health Inc., which produced a 3.3 times multiple on Clayton Dubilier’s invested capital, the person said. It also fully sold its stake in Hertz Global Holdings Inc., which generated a 2.6 times multiple on invested capital.

Clayton Dubilier started raising money for the new fund in March, and had gathered about $3 billion in an initial close in August. At $6 billion, the fund would be larger than the prior pool that collected $5 billion in 2009. That fund, Clayton Dubilier & Rice Fund VIII LP, was generating a net internal rate of return of more than 20 percent and a 1.7 times multiple of invested capital as of June 30, a person familiar with the returns said in August.

Rice Retires

Clayton Dubilier’s chairman and co-founder Joseph Rice III, who helped start the firm in 1978, retired last year. The company is led by Donald Gogel, who has worked at Clayton Dubilier for 23 years.

Clayton Dubilier generally invests in distribution or services-related businesses with enterprise values of $1 billion to $15 billion, according to the firm’s website. The company is staffed with a team of operating partners who usually work as chairman of the board at each of the companies that the private- equity firm invests in.

--Editors: Sree Vidya Bhaktavatsalam, Christian Baumgaertel