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Illinois Tool Works Inc
Sally Beauty Holdings Inc
Clayton Dubilier & Rice LLC, one of the industry’s oldest private-equity firms, plans to seek about $5 billion for its next fund, the same amount it gathered for a predecessor raised in 2009, according to three people familiar with the matter.
Clayton Dubilier & Rice Fund IX LP is expected to officially come to market next year, said one of the people, who asked not to be named because the information is private. The New York-based firm closed its prior fund in December of 2009 below the $7.5 billion it originally sought.
Clayton Dubilier, which specializes in buying unwanted or underperforming divisions of larger corporations, will join an increasingly competitive fundraising market. The number of funds vying for capital in the third quarter rose 11 percent to 1,918 from the same period last year, according to researcher Preqin Ltd. The amount sought rose 13 percent to $796.5 billion.
Thomas Franco, a partner at the firm, declined to comment.
Clayton Dubilier’s chairman and co-founder Joseph Rice III, 80, who helped start the firm in 1978, retired this year. The firm is led by Donald Gogel, who has worked at Clayton Dubilier for 23 years.
Clayton Dubilier usually invests in distribution or services-related businesses with enterprise values of $1 billion to $15 billion, according to the firm’s website. The firm is staffed with a team of operating partners who typically work as chairman of the board at each of the portfolio companies. These operating partners generally work with one to three portfolio companies, according to the website.
The firm in recent months has completed deals including the purchase of the decorative surfaces business of Illinois Tool Works Inc. (ITW) and the acquisition of David’s Bridal Inc. for about $1.05 billion.
Clayton Dubilier in July sold the remainder of its stock in Sally Beauty Holdings Inc. (SBH) following several secondary offerings, which in total returned 3.4 times investors’ money, according to one of the people. The firm purchased the specialty retailer in 2006 as part of a $3 billion recapitalization of Alberto-Culver Co. It generated a total of $1.9 billion in proceeds from its investments.
Clayton Dubilier distributed $4.3 billion to investors from 2011 to 2012, according to one of the people. The prior fund was generating a 1.5 times multiple and a 28 percent gross internal rate of return as of Sept. 30, the person said. The firm’s Fund VII, which closed at $4 billion in early 2006, was producing a 1.7 times multiple and 13 percent gross IRR as of the same date.
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