Clayton, Dubilier & Rice (CD&R)

Funds managed

Fund nameAsset ClassLicense
Clayton, Dubilier & Rice Fund Xi-aPE
Clayton, Dubilier & Rice Fund XPE
CD&R Associates XPE

About the AMC

  • Since 1978, boards, CEOs, family owners, and entrepreneurs have turned to CD&R as their trusted partner to help businesses grow profitably.
  • Their presence in North America and Europe, focuses on market-leading businesses in the consumer/retail, healthcare, industrial, and services sectors.
  • CD&R has also established strategic relationships with Kedaara Capital Advisors LLP in India and Principle Capital in China, both operationally-oriented private investment firms which provide a lens into two of the world’s most important growth markets.
  • CD&R strives to enhance the value of each business it acquires by implementing a combination of long-term growth, productivity, capital efficiency, and strategic measures.
  • A critical element of investment success is reward-sharing, which is why we emphasize incentives that support alignment, including substantial equity ownership for our portfolio company management teams.
  • Mr. Rice is a founder of the Firm. He has spent the major portion of his business career in private equity and is one of the founders of the industry.
  • Mr. Rice is trustee emeritus of Williams College and a member of the Council on Foreign Relations and the Brookings Institution. He is also a co-founder of the Private Capital Research Institute.

Investment Philosophy (for firm)

We concentrate our investment resources on market-leaders with the potential to enhance or accelerate operating performance. We seek to craft investment opportunities where the Firm’s distinctive skills can produce sustainable value for our portfolio companies and investors.

Our investments take a variety of forms. We acquire non-core corporate divisions and family enterprises transitioning to new ownership, as well as businesses from other private and public owners. Often, we craft partnerships with sellers who retain significant ongoing ownership and share in future value creation alongside CD&R.

The industries we target for investment are consumer/retail, healthcare, industrials, and services. Our companies range in size from regional sector champions to global industry leaders and typically share several key attributes:

  • Leading sustainable market positions in industries poised for long-term growth;
  • Competitive advantages through differentiated products, services, or processes;
  • Potential to improve growth and enhance productivity;
  • Broad “spread of risk” characteristics, such as multiple locations, wide-ranging customer and supplier bases, and diverse revenue streams;
  • Attractive return on capital characteristics; and
  • Stable cash flows.

Investment Strategy (for firm)

We invest in many globally diversified businesses. No matter where we are, the foundation of our strategy is to partner with management to create long-term, sustainable value. We are able to marshal global resources to help companies introduce new products and services, expand into new territories, execute productivity initiatives, pursue strategic M&A, tap into global financial markets, and execute other strategies to enhance business performance.


Title: ‘CD&R keen on emerging markets like India’, Source: Economic times, Date: 25 June 2010

One of the premises on which private equity (PE) firm Clayton, Dubilier & Rice (CD&R ) was founded was that good businesses are built with trustworthy partners. Even after 32 years since its inception, CD&R has lived up to its principles. By bringing Manvinder Singh ‘Vindi’ Banga and AG Lafley — formerly with rival companies, UnileverNSE 0.86 % and Procter & Gamble — under one roof, CD&R has ensured that the best of corporate leaders would be assisting it in the process of attracting investment opportunities, managing and transforming businesses, more so in the developing and emerging markets . In conversation with TOI, Banga talks about his new task at hand. Excerpts:

What’s the reason for joining CD&R ?

CD&R is a unique PE firm with a history and a glorious past. It focuses on making businesses better by reforming companies which have run out of steam. This could include corporate transformations, operational transformation, in some cases, financial engineering and in yet others, improving the intrinsic quality of businesses. Because of its philosophy of operational enhancements, CD&R has brought about 90% value creations through transformation and real improvement in business. It’s a very good place for people who have had vast experience in managing corporates.

Title: How private equity adapts: A discussion with Don Gogel, Source: mckinsey, Date: 07 November 2016

Don Gogel is the chairman and CEO of Clayton, Dubilier & Rice, a private-equity (PE) firm that in its nearly 40-year history has acquired more than 70 companies, for a total transaction value of more than $100 billion. Gogel has served as CEO since 1998. McKinsey’s Bryce Klempner and Mark Staples spoke with him in August 2016 in New York.

McKinsey: You have been in private equity for a while, as it has expanded and changed. How do you see it progressing? Is private equity a scalable asset class?

Don Gogel: If we’re talking about PE funds under management as a percentage of all assets, I think there’s enormous opportunity, simply because private equity is just another form of ownership. There’s no ceiling, no regulatory-capital issue. It’s just about relative performance. PE has some structural advantages, which increase the power of the best firms to outperform. PE has better alignment of incentives between GPs [general partners] and LPs [limited partners] than public companies have between shareholders and management. Alignment in management and the resulting reduction in agency costs is a great structural advantage. Another is the relatively small size of PE firms, which allows them to make more coherent decisions and to act on those decisions more efficiently.

A third advantage for PE stems from a disadvantage of public companies, where the distractions of public markets drive weaker performance in a number of ways. All the public-company CEOs I know say they spend 20 or 30 percent of their time on public-related issues, which they know are important but diminish the time they can spend improving their business performance. That’s a lot of lost productivity. And there are other problems with public markets, such as short-term and quarterly earnings and activists.

McKinsey: What benefit does PE derive from all these advantages?

Don Gogel: Adaptability. The asset class’s adaptability is extraordinary. First, we are not forced to be fully invested. When people ask me the best years we’ve had, I often cite the three years we made no investments. What a wonderful asset class. You don’t like what you see, and for whatever reason you can’t make the numbers work, so you don’t invest. That flexibility is terrific and a luxury that other asset classes simply do not have.

Another way PE is adaptable is in its ability not only to follow areas where value is likely to emerge but also to go deeper and deeper into them. Take healthcare. We started largely as investors in industrial companies. Until several years ago, we did very little healthcare investing, mostly because either the industry dynamics didn’t lend themselves to our model or there were such heavy regulations that it wasn’t very attractive to us. But the disruptive effects of the Affordable Care Act have created some interesting investment opportunities. We have continued to expand in healthcare. Unlike acquisitive public companies that venture into businesses beyond their core activities, often with mixed results, we’ve been able to organically build staff with highly relevant skills and experience and then find opportunities that match up well with our capabilities. And, as we demonstrate proof of concept, we build more staff and go deeper, all at our own pace. We don’t have to put the capital to work until we’re comfortable that we have the right talent in place and the timing is right.

Those kinds of things lead me to think there’s plenty more for PE to do. And the external environment is only pushing us further ahead. All the problems with public markets remain in place, as does the persistent low-interest-rate environment.

McKinsey: Most LPs come to this asset class looking for relative outperformance. McKinsey and some other market observers are projecting a prolonged period of low returns across both public equities and fixed income. How might that affect PE?

Don Gogel: I’m confident that PE will outperform the public markets because of its structural advantages. The more interesting question is how to choose among GPs. When I started in this business, if there were 100 legitimate institutional-style GPs, that would have been a lot. Since then, of course, it’s gotten more competitive, and competition drives down returns. But over time you have still seen some persistence of the top-quartile firms, and the gap between the top quartile and the bottom quartile is something like 3,000 basis points. So the question is less whether private equity is a good asset class and more whether good managers can continue to perform, and how they can scale.

Although I think the industry will continue to scale, I also think there are limits on creating alpha within an individual firm because each firm’s investment process is highly idiosyncratic. Yes, there are some common standards and criteria among firms—everyone looks at the same data for markets and competitors—but it’s the magic of the particular firm that allows it to find uncommon or obscured opportunities. As PE grows, a risk is that what happened to hedge funds will happen to this asset class. At one time, there were hedge funds that saw things that others didn’t see, and then so many people started hedge funds that the industry wound up with crowded trades everywhere. In PE, we already see crowded trades when there’s a big auction for a good property. These are the common opportunities that everybody sees the same way.


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