Warburg Looks to Spring for Fundraising Wrap

Warburg Pincus, whose holdings include eye-care products supplier Bausch & Lomb Inc . and U.K. food producer Premier Foods PLC , is aiming to close up fundraising for its latest vehicle in the spring, said people with knowledge of the situation.

The New York firm is in the final stages of soliciting investors for commitments toward Warburg Pincus Private Equity XI LP , as the buyout shop looks to close within its targeted range of $10 billion to $12 billion by early May, these people said.

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Warburg so far has closed on $7 billion in commitments, one of the people familiar with the matter said.

The firm is fundraising in a crowded market as many of its rivals are also looking to investors for checks, including Carlyle Group, Kohlberg Kravis Roberts & Co., Providence Equity Partners and Bain Capital , among others.

Steady performance and strong returns have helped the firm bring in commitments from limited partners.

New Jersey Division of Investment, which committed $300 million, said in a May investment memo Warburg's funds have "generated consistent returns," while rankings "as a top quartile performer."

New Mexico Education Retirement Board, a pension plan that agreed to invest $75 million into the fund, said in its November meeting that Warburg's strategy of using one fund to invest across a variety of stages, such as venture, growth and buyouts, was a selling point. That strategy differs from approaches employed by other firms, such as Carlyle, which raises a variety of funds, with each one focusing on a different geography or business stage.

To further entice investors, Warburg offered fee breaks to limited partners willing to write big checks, such as the Washington State Investment Board , which agreed to invest up to $750 million into Warburg's fund in late 2011.

Investors that commit at least $200 million to Warburg's latest fund are charged a management fee of 1.3% on committed capital for six years following the first close, LBO Wire previously reported. All other investors are being charged a 1.4% management fee on total commitments for that period.

Other terms include a $300 million minimum commitment from the general partner and a profit-split of 80% for limited partners and 20% for the general partner. In addition, the fund doesn't have a preferred return, which is usually an annual rate of return on top of a base amount that must be returned to investors before a firm can take any profit.

Warburg's last fund was raised in 2009 and ended up closing at $15 billion, above Fund X's $12 billion target.

That vehicle had a internal rate of return of 5.5% and an investment multiple of 1.15 times, according to the Oregon Public Employees Retirement Fund, an investor in the pool.