Leonard Green & Partners LP, the buyout firm whose investments include Whole Foods Market Inc. and J. Crew Group Inc., raised about $4 billion for its sixth fund, according to two people with knowledge of the matter.
The firm, based in Los Angeles, aims to complete fundraising for Green Equity Investors VI LP this month, with a formal close early next year, said one of the people, who asked not to be identified because the information is private. It started raising money this year with a goal of matching its 2007 fund at $5.3 billion and later set a cap of $6 billion.
The company, founded in 1989 by the late Leonard I. Green, oversees about $9 billion in equity, according to its website. Larger firms, including KKR & Co., which manages $44 billion in buyout funds, and Providence Equity Partners Inc., with $23 billion, are planning pools that are smaller than their predecessors.
“There is more pressure at the large end of the market to come back in smaller size as it is more difficult to put out large amounts of capital in what is a debt-constrained market,” said Kelly DePonte, a partner at Probitas Partners LLC, a San Francisco-based firm that helps funds raise money.
Michael Gennaro, Leonard Green’s chief operating officer, declined to comment on fundraising.
In addition to imposing a cap on the fund, which investors prefer so that it doesn’t grow too large, Leonard Green will give them 100 percent of fees charged to companies it acquires. It initially planned to give them 80 percent of the fees.
The firm’s fifth fund generated an 18 percent net internal rate of return and its holdings were valued at 1.3 times cost as of June 30, according to performance data published by the Washington State Investment Board on its website.
Leonard Green usually targets deals of $500 million to $2 billion in enterprise value, according to its website. The firm’s investments also include BJ’s Wholesale Club Inc. and Jo-Ann Stores Inc.