Warburg’s $8B Fund Swells Buyout Tills

Buyout funds continue to grow, as do the number of potential acquisition targets.
Stephen TaubAugust 15, 2005

Warburg Pincus LLC has announced that it is closing an $8 billion global fund, the largest pool of capital raised by the firm since it was established in 1966. The company stated that Warburg Pincus Private Equity IX LP will invest in companies across core industry sectors in North America, Europe, and Asia and in early-stage, growth, and late-stage businesses.

Last month, Blackstone Group LP received commitments of $12.5 billion for its buyout fund, according to Bloomberg, which called it the industry’s largest. The wire service also noted that earlier this year, Goldman Sachs Group Inc. raised $8.5 billion and Carlyle Group scooped up $7.85 billion.

And last week, according to Reuters, British-based CVC Capital Partners raised $7.4 billion, making it the biggest European buyout fund.

Altogether, buyout firms are expected to raise a record $200 billion this year, mostly from institutional investors such as pension funds, according to Bloomberg, citing London-based Private Equity Intelligence Ltd. Many of these investors are no doubt aware that last year private equity funds returned 16.4 percent, compared with 9 percent for the Standard & Poor’s 500 Index, according to the report, which cited Thomson Venture Economics and the National Venture Capital Association.

In the first half of 2005, buyout firms announced at least $148 billion of acquisitions, nearly 65 percent more than in 2004, according to Bloomberg.

Indeed, on Monday buyout giants Kohlberg Kravis Roberts & Co. and Silver Lake Partners announced that they had agreed with Agilent Technologies Inc. to acquire that company’s Semiconductor Products Group for $2.66 billion, creating the largest privately held independent semiconductor company in the world.