Warburg Pincus raises $15bn

The diversified firm, jointly led by Charles Kaye, has surpassed its target by 25 percent, as investors look to emerging markets and growth capital for returns.

Warburg Pincus has held the final close of its 10th global fund on $15 billion (€9.4 billion) beating its target of $12 billion by 25 percent. The firm had its first close for the fund on $9 billion in October. Warburg Pincus’ previous fund raised $8 billion in August 2005.

Charles Kaye:
raises $15bn

The fund’s investors included public and private pension funds, endowments and global financial institutions such as the Washington State Investment Board, the US pension fund, and GE Asset Management, the asset management arm of General Electric. First-time investors included the Universities Superannuation Scheme, a UK pension fund, and the Teacher Retirement System of Texas, a US pension fund.

The successful fundraising is another instance of limited partners backing the asset class despite worries raised by the credit crunch.  In the first quarter of 2008 US private equity fundraising was up 32 percent on the same period last year, to $58.5 billion across 81 funds, according to Dow Jones. European fundraising was also up, to $17.3 billion across 38 funds, a 24 percent volume increase.  The data does not include funds that have yet to formally close such as Apax Partners’ latest effort which has raised €11 billion ($17.6 billion) from limited partners and is finalising a parallel fund from its staff on an undisclosed amount, according to a source close to the company.

Warburg Pincus invests in venture as well as growth capital and later stage investments. It is also diversified into emerging markets investing in Central and Eastern Europe, China and India. The firm makes more than 40 percent of its investments outside the US. As a private equity investor it internationalised early on, opening a London office in 1987 and a Hong Kong office in 1994.

Joseph Dear, the executive director of Washington State Investment Board, said in a statement: “A handful of firms have consistently delivered superior returns to our retirement assets – and Warburg Pincus is one of them.” Dear said Warburg Pincus was well-positioned to perform, especially in present market conditions.

In December the firm committed to invest $1 billion in MBIA Insurance, the troubled US bond insurer, in one of the first capital injections to a financial company by a private equity firm since the credit crunch. Warburg Pincus initially invested $500 million of this commitment in December, at $31 per share, and following the further collapse of the insurer’s share price it subsequently took part in an MBIA rights issue at $12.15 per share in February, investing a further $300 million. MBIA was trading at $12.98 per share at yesterday’s close.