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Madison Dearborn’s $10bn fund closes on $4bn after 28 months

6 May 2010

Chicago private equity firm Madison Dearborn has limped across the finish line with the long-awaited close of its sixth buy-out fund on $4.1bn, according to reports.

Launched in the pre-crash days of December 2007, the firm had originally targeted a $10m final close for the fund, which was cut to $7.5bn in summer 2008 as the downturn was starting to bite.

Several large LPs declined to invest in the Madison Dearborn Capital Partners VI fund, including the California Public Employees’ Retirement System (CalPERS), the California State Teachers’ Retirement system (CalSTRS), Makena Capital Management and the Ireland National Pensions Reserve Fund.

Fundraising was also hindered by the performance of the firm’s previous $6.5bn fund, which saw several flagship buy-outs including the $7.3bn acquisition of US technology supplier CDW Corporation, and the $13.7bn takeover of Spanish language media company Univision alongside Providence Equity Partners, TPG and Thomas H Lee, which proved difficult to achieve realisations on when the markets crashed.

Some LPs have greeted the smaller fund size with relief, according to the Wall Street Journal, as it may realign the firm’s focus to mid-market growth investments.

Returning investors include Yale, Harvard, Northwestern and Lehigh universities, the Pennsylvania State Employees’ Retirement System (SERS), Abbott Capital Management, Portfolio Advisors, Montana Board of Investments and Pathway Capital Management.

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