Reuters: U.S.: Bain to seek $6 billion for new buyout fund: sources

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Bain to seek $6 billion for new buyout fund: sources May 30th 2012, 14:19 By Greg Roumeliotis NEW YORK | Wed May 30, 2012 10:19am EDT NEW YORK (Reuters) - Bain Capital LLC told investors it aims to raise $6 billion for its new global private equity fund and will offer three options on fees it charges to manage the money, according to people familiar with the matter. In a year in which its former boss and co-founder, Republican presidential hopeful Mitt Romney, has come under political attack for his tenure at Bain, the private equity firm will be asking for money from their pension funds and endowments as well as other institutional investors from across the globe. The Boston-based firm has argued it has created hundreds of thousands of jobs in its 28-year history and supported hundreds of charities. Bain investors contacted by Reuters in March, including some of the largest U.S. public pension funds, said political attacks made no difference in their assessment of Bain and that their focus was on returns and the fees currently being charged. Bain can also point to recent investor trust. It has told investors that its second Asian fund would be wrapping up fund raising this week, having reached its target of $2 billion. Bain is preparing to kick off fund raising for its new fund, Bain Capital Fund XI, by the end of June, sending out a private placement memorandum with the final terms, the people said. Fund X, the firm's previous global fund, was $10.7 billion. Bain Capital Fund XI will also receive a $600 million commitment from the firm's fund managers to demonstrate alignment of interest, the sources said. A fundraising close could come as early as the first quarter of 2013, Bain has told investors. Bain has told investors that a $2 billion co-investment fund will be raised alongside Fund XI, and that access as well as terms that investors get on that fund will be tied to the size of their commitment to the core fund, the sources said. Bain declined to comment. Private equity firms have historically used the 2/20 fee structure -- charging a 2 percent fee to manage the assets and 20 percent carried interest. The carried interest kicks in once the profits reach a preferred rate of return. But Bain has told investors they will have different options. The one seen by investors as more conventional will be based on a 1.5/20 fee structure with a 7 percent preferred return rate, the people said. A second option will be a 1/30 fee structure, geared toward making fund manager remuneration more performance-based, with the preferred rate of return set again at 7 percent, the people said. The third option, advertised by Bain as the ultimate alignment of interest with investors, will be based on a 0.5/30 fee structure with no preferred rate of return, the private equity firm told investors. (Reporting by Greg Roumeliotis in New York; Editing by Gerald E. McCormick and Maureen Bavdek) Link this Share this Digg this Email Reprints

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