Bain Capital is planning to raise about $9 billion for its next flagship global buyout fund, as the U.S. alternative asset manager seeks to tap demand from yield-hungry investors, people familiar with the matter said.
The Boston-based firm has started discussions with new and existing investors about the fund, which it aims to close later this year, according to the people, who asked not to be identified because the information is private.
Bain’s last flagship fund closed in 2017 at $9.4 billion, which included $8 billion from investors and another $1.4 billion from the firm’s own partners. Similar internal commitments could increase the eventual size of the new fund by a further 10% to 15%, the people said.
Buyout firms have been on a fundraising spree as institutional investors reach for better returns in an environment of low interest rates and poor performance from stock-picking fund managers. The fundraising in the midst of a global pandemic is a bullish sign for an industry that’s had to grapple with the struggling economy’s effects on companies already under private equity ownership.
A representative for Bain declined to comment.
While leverage may be harder to come by, the market downturn created plenty of buying opportunities for sponsors. The private equity industry is sitting on around $1.4 trillion in unspent capital, according to data compiled by Bloomberg.
There has been a preference for allocating money to a smaller number of established firms such as Blackstone Group Inc. and Carlyle Group Inc., sending fund sizes to new heights. In Europe, CVC Capital Partners is considering a target of more than 18 billion euros ($19.5 billion) for its next flagship fund, Bloomberg News has reported, while EQT AB is seeking to raise about 15 billion euros.
Firms like Bain are becoming one-stop shops for institutional investors such as endowments and sovereign wealth funds by offering bets in a range of alternative asset classes. Bain, founded in 1984, oversees about $105 billion across private equity, credit, real estate and other strategies. The firm is also seeking $1 billion for a tech opportunities fund, investing in Europe from a 4.35 billion-euro fund and has a $4 billion buyout fund in Asia.