Dec. 5 (Bloomberg) -- Thomas H. Lee Partners LP raised $8.1 billion for leveraged buyouts, a sign that investors expect LBOs to rebound after financing for the biggest deals dried up.

The fund, the Boston-based firm's sixth and largest, will focus on North American companies, said two people with knowledge of the plan. Its earlier funds have acquired companies including Dunkin' Brands Inc. and Warner Music Group Corp.

LBOs valued at more than $5 billion have dropped to four since June 30 from 19 in the first six months of the year, according to data compiled by Bloomberg, amid concerns that subprime-mortgage losses will spread to other types of debt. Still, firms are seeking $255 billion for 239 new buyout funds, say researchers Private Equity Intelligence Ltd. in London.

``The opportunity to invest in the private markets remains very strong,'' said Rick Nathan, a member of the investment committee of Kensington Capital Partners Ltd. of Toronto, which invested an undisclosed amount in the Thomas H. Lee Partners fund. ``The mega-deals, the multibillion-dollar deals above $5 to $10 billion have stopped, but the overwhelming majority of the market remains active.''

There have been a record $762.6 billion in private-equity transactions this year, Bloomberg data show.

Buyout Debt Backlog

Banks have a backlog of $230 billion in LBO loans and bonds to sell to investors, according to estimates yesterday from analysts at JPMorgan Chase & Co. in New York.

Along with the new fund, Thomas H. Lee Partners gathered an additional $2 billion in commitments from limited partners who may co-invest in its takeovers, said the people, who asked not to be named because the fund is private.

Matt Benson, a spokesman for the firm, declined to comment.

The Lee fund is the biggest since New York-based Blackstone Group LP finished raising $21.7 billion in August. Thomas H. Lee Partners, also known as THL Partners to distinguish it from its namesake founder who left last year, has invested about $12 billion since 1974.

THL's fifth fund returned an average of 23 percent a year since its inception in 2001, according to data posted on the Web site of the California Public Employees' Retirement System, or Calpers, the largest U.S. public pension. The Standard & Poor's 500 Index gained 3.4 percent a year including dividends since the start of 2001.

Simmons, Refco

The earlier fund invested in mattress maker Simmons Co.; Michael Foods Inc., a supplier of refrigerated foods; and textbook publisher Houghton Mifflin Co. The sale of Houghton in November 2006 for $3.4 billion generated a return of about 300 percent, according to documents from the New Mexico State Investment Council.

THL's fifth fund also invested $453 million in June 2004 to buy a controlling stake in futures brokerage Refco Group Ltd. In October 2005, Refco filed for bankruptcy protection after chief executive Phillip Bennett allegedly hid $430 million of debt.

The firm, along with Boston-based Bain Capital LLC, is set to buy Clear Channel Communications Inc. for $19.5 billion. The San Antonio-based radio broadcaster said yesterday that deal wouldn't be completed until next year.

THL on Nov. 9 completed its $5.3 billion buyout of Minneapolis-based Ceridian Corp., the human-resources manager for companies including GlaxoSmithKline Plc.

To contact the reporters on this story: Jason Kelly in New York at jkelly14@bloomberg.net; Pierre Paulden in New York at ppaulden@bloomberg.net

Last Updated: December 5, 2007 16:04 EST