Déjà Vu All Over Again? – BC Partners’ New Fund Falls Short in Fundraising
July 15, 2021
UK-based private equity firm BC Partners struggled to raise its last buyout fund, BC European Capital X, in 2017. History may be repeating itself with BC Partners’ newest buyout fund, BC Partners XI.
BC Partners began talking with investors in late 2019 about raising $10 billion (€8.5 billion) for its 11th fund.[1] BC Partners registered the fund in October 2019 and almost two years later, it appears to be far short of its target. The average time that private equity funds spent in the market raising money was about 15 months in 2020, data provider Preqin reported[2]
This is exactly what some analysts warned about. In 2017, BC Partners struggled to hit its fundraising target for its last fund (BC European Capital X) as some of its high-profile holdings ran into trouble.
“[BC Partners] can ill afford another experience like the last round,” a May 2019 Bloomberg story said. “It took BC about 18 months before it finally hit its 7 billion-euro ($7.9 billion) target in 2018, losing ground to some competitors. Six months earlier, CVC Capital Partners had raised more than twice that amount in a third of the time.”[3]
BC Partners ultimately closed BC European Capital X in early 2018[4] with the aid of a $1 billion stapled secondaries deal with private equity secondaries firm Lexington Partners. As part of the deal, Lexington Partners also acquired stakes from 22 limited partners in BC Partners’ predecessor fund.[5]
“We did hit our fund target – it’s true that it took longer than we’d planned but we did make that figure,” BC Partners Chairman Raymond Svider said.[6]
As of May 2021, Private Equity International reported that BC Partners XI has raised just 3.08 billion euros – less than half of its 8.5 billion euros target.[7]
“The mood music around BC is that the jury is still out,” said Charlie Bott, BC Partners’ former head of investor relations said in 2019 before the launch of BC Partners XI.[8]
Bott, who retired in 2018, was one of a string of departures among BC Partners’ investor relations staff in recent years. Laura Cogis also left in 2018,[9] and Richard Kunzer left in April 2021.[10]
Some large investors in BC Partners’ past funds appear to have thus far held off on investing in BC Partners XI, including the California State Teachers Retirement System, the Canada Pension Plan Investment Board, the Hong Kong Monetary Authority, the Ontario Teachers’ Pension Plan, the Washington State Investment Board, the Kuwait Investment Authority, The State of Connecticut Treasury, and the Korea Investment Corporation.
BC Partners reported that pension funds accounted for 45% of the commitments to its last fund, and sovereign wealth funds accounted for 20%.[11]
[1] https://pitchbook.com/newsletter/bc-partners-weighs-going-big-with-next-fund
[2] https://caia.org/sites/default/files/2021-04/CAIA%20%26%20Preqin%20-%20Private%20Equity%20Market%20Update%204-15-21.pdf
[3] https://www.bloomberg.com/news/articles/2019-05-01/-amazing-svider-man-fights-to-prove-bc-partners-revamp-pays-off
[4] “BC Partners closes tenth flagship private equity fund at €7bn,” Media release, Jan 17, 2018.
[5] “BC Partners to close Fund X with aid of staple,” Secondaries Investor, Sept 26, 2017.
[6] https://www.bloomberg.com/news/articles/2019-05-01/-amazing-svider-man-fights-to-prove-bc-partners-revamp-pays-off
[7] https://www.privateequityinternational.com/bc-partners-raises-e3-08bn/
[8] https://www.bloomberg.com/news/articles/2019-05-01/-amazing-svider-man-fights-to-prove-bc-partners-revamp-pays-off
[9]https://www.penews.com/articles/bc-partners-head-of-investor-relations-management-steps-down-20180417
[10]https://www.linkedin.com/in/richard-kunzer-6408a032/, https://www.privateequityinternational.com/bc-partners-loses-ir-rainmaker-appoints-top-citi-banker-as-global-head/
[11] “BC Partners closes tenth flagship private equity fund at €7bn,” Media release, Jan 17, 2018.
