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Private equity firms commonly refer to the general partner commitment, capital they commit to their own funds, with the oft-overused term “skin in the game.”
Boston-based Bain Capital’s contribution to its latest mega buyout fund may be more of an entire hide.
The buyout firm founded by former presidential nominee Mitt Romney, has wrapped up its eleventh buyout fund at $7.3 billion, including $800 million from Bain itself. The $800 million marks the firm’s largest commitment to date to its own fund, according to a person familiar with the fundraising.
Bain Fund XI LP closed ahead of the fund’s $6 billion target but just shy of a $7.5 billion hard cap. News of the fund’s final closing was previously reported by various media outlets.
Bain has long had a reputation of contributing large amounts of its own money to the funds that it raises and often touts the fact that the Boston-based firm is the largest investor in its own funds. About 7% of Bain’s $10.7 billion prior core North American buyout fund, or a little more than $700 million, came from the firm itself, while Bain pledged $300 million of the $2.3 billion that it raised for its second Asia fund.
Although Bain’s latest fund focuses on North America, the firm can invest in deals around the globe, sometimes alongside its other buyout funds. Bain is currently in the process of marketing its fourth European buyout fund, which has a 3.5 billion euro target, and closed its second Asian fund back in 2012. One of the firm’s first deals out of the new fund was its investment in Brazilian health insurance operator Intermedica Sistema de Saude SA. The firm purchased the company for about 2 billion Brazilian reais ($851 million), The Wall Street Journal reported earlier this year.
Institutional investors have focused greater attention on private equity fund terms in recent years, including the amount of capital that private equity firms commit to their own funds. Typically, private equity firms contribute an average of between 1% and 5% of the capital they raise for their funds. Investors that have signed on to Fund XI include the New Mexico Educational Retirement Board, Regents of the University of California and Tennessee Consolidated Retirement System.