Leonard Green Said to Gather $6 Billion for Largest Fund

Photographer: Daniel Acker/Bloomberg

A shopper at a Whole Foods Market in New York. Close

A shopper at a Whole Foods Market in New York.

Photographer: Daniel Acker/Bloomberg

A shopper at a Whole Foods Market in New York.

Leonard Green & Partners LP, the private-equity firm that backed Whole Foods Market Inc. and J. Crew Group Inc., has raised more than $6 billion to make its next fund its largest, said two people familiar with the matter.

The firm, based in Los Angeles, gathered $5.8 billion in commitments from limited partners for Green Equity Investors VI LP, said the people, asking not to be identified because the information isn’t public. With the general partner investment, the fund will surpass $6 billion at closing.

Michael Gennaro, Leonard Green’s chief operating officer, didn’t return an e-mail yesterday seeking comment.

Some of the big buyout firms that compete with Leonard Green are targeting smaller pools of capital than before in a difficult fundraising environment. The amounts New York-based KKR & Co. and Providence Equity Partners Inc. in Providence, Rhode Island, are seeking for their latest flagship funds are down at least 40 percent from the previous pools.

Leonard Green’s general partner commitment was increased this year to $250 million from $200 million, the people said. The firm made other changes to the fund in 2011, including agreeing to give limited partners 100 percent of the transaction fees charged portfolio companies instead of the originally planned 80 percent. It also imposed a $6 billion limit on outside investors to keep the fund from getting too big, according to the people.

The firm started raising money in last year’s third quarter with a goal of matching its fifth fund, which closed at $5.3 billion in 2007. Leonard Green had raised about $4 billion as of December.

Returns of 15%

The prior fund was producing a multiple of 1.3 times invested capital and an internal rate of return of 15 percent as of Sept. 30, according to performance data from Washington State Investment Board, one of the firm’s pension-fund clients.

The firm, founded in 1989 by Leonard I. Green, is headed by Managing Partners John Danhakl, Peter Nolan and Jonathan Sokoloff. It invests in deals of $500 million to $2 billion in enterprise value, according to its website, and specializes in consumer-focused companies such as BJ’s Wholesale Club Inc. and Jo-Ann Stores Inc.

To contact the reporter on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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