Hellman & Friedman has raised one of the biggest-ever pools of private equity capital, after investors committed $24.4 billion to its latest flagship fund.
The U.S. buyout firm pledged $1.8 billion to Hellman & Friedman Capital Partners X, which was “significantly” oversubscribed, according to a statement. The closing of the fund brings its total assets under management to more than $80 billion.
The fund is Hellman & Friedman’s biggest to date and ranks among the largest raised by a private equity firm. It comes in just under Blackstone Group Inc.’s roughly $26 billion Capital Partners VIII and Apollo Global Management Inc.’s $24.6 billion Fund IX, according to data compiled by Bloomberg. CVC Capital Partners closed a 21 billion-euro ($24.9 billion) buyout vehicle last year.
Investors continue to pour record amounts of money into the private equity industry, which is using its vast sums of unspent capital to hunt for acquisitions in the post-pandemic world. Opportunities stemming from the crisis, an abundance of cheap credit and willing sellers looking to clean up balance sheets are creating ripe conditions for bigger deals.
“When the market environment and valuations are ‘risk on’, there are lots of opportunities because people are more willing to engage at a high price than they are at a low price,” Patrick Healy, Hellman & Friedman’s chief executive officer, said in an interview.
Soaring equities have been driving up the prices of assets, while valuations are also high in the private markets as owners take advantage of investors’ rampant appetite for technology startups and family-owned businesses to manage their succession plans. For private equity buyers, being right on valuation multiples is only half the challenge, according to Healy.
“If you’re right on the business analysis and you are buying high quality and you really have a growth oriented plan, you are going to be OK,” he said.
The size of Hellman & Friedman’s new fund, and broader pressures to deploy capital, could lead to bigger deal-tickets in the buyout world.
Private equity firms have spent $623 billion in transactions this year, Bloomberg data show, more than double the amount at this point in 2020. Hellman & Friedman has been involved in acquisitions valued at almost $40 billion this year, including a mammoth bid to buy medical supply company Medline Industries Inc.
It’s also been behind some of the most high-profile deals in European financial services in recent years, including the tie-up of payments firms Nexi SpA and Nets A/S, and the listing of mutual-fund distributor Allfunds Group Plc.
Founded in 1984, Hellman & Friedman is among the best-known private equity houses in the world. It focuses on traditional buyouts, a contrast to large peers that have diversified into other private-market strategies such as credit and infrastructure. Its new fund will not have a hurdle rate — the return a firm must generate before it can share in any profit.
Unlike Blackstone, Apollo, Carlyle Group Inc. and KKR & Co., Hellman & Friedman remains a privately-held company and its CEO has no plans to join the current crop of alternative investment firms seeking to go public.
“If you look at the firms that have gone public, they pursue the multi-asset strategy approach, and by the way that’s been fine and has generated great returns for shareholders,” he said. “My ambition is for Hellman & Friedman to be the best large-cap manager in the developed markets within private equity.”