CD&R's $26 Billion Fund: A Defiant Signal in a Challenging Private Equity Climate

In an era marked by macroeconomic turbulence, geopolitical tensions, and liquidity constraints, the private equity landscape in 2025 has become a proving ground for firms that can balance ambition with pragmatism. Against this backdrop, Clayton, Dubilier & Rice (CD&R) has emerged as a standout, with its $26 billion Fund XII nearing the halfway mark in capital deployment and its next flagship fund already in early discussions with limited partners. This bold move, even as global fundraising slowed to $383.6 billion in the first half of 2025, underscores a critical thesis: strategic LP commitments to resilient buyout firms like CD&R can outperform in downturns.

Historical Resilience: A Blueprint for Success

CD&R's track record during past economic crises provides a compelling case for this argument. During the 2007–2009 global financial crisis, while industry-wide fundraising plummeted to $248 billion in 2009-less than 40% of 2008's total- CD&R not only retained investor trust but raised larger funds than its previous vintage. This resilience was driven by its operational expertise and long-term value-creation strategies. For instance, its investments in companies like ServiceMaster and David's Bridal showcased a focus on restructuring and cost optimization, enabling portfolio companies to weather downturns while delivering returns.

Similarly, during the 2020–2021 pandemic, CD&R's alignment with LPs and its emphasis on defensive sectors positioned it to navigate the initial fundraising slump. While global PE fundraising dropped to $100 billion in Q2 2020, the firm's reputation for disciplined capital preservation likely insulated it from the broader market freeze. This pattern of outperformance-rooted in a collaborative, solution-focused approach-has cemented CD&R's status as a Top Private Equity Firm of 2025 for the third consecutive year.

Strategic Positioning in 2025: Navigating a New Normal

The current economic climate presents fresh challenges, including trade tensions, rising tariffs, and a more competitive exit environment. Yet CD&R's proactive engagement with LPs for its next fund signals confidence in its ability to adapt. The firm's historical success in downturns is not accidental; it stems from a strategic emphasis on defensive and income-generating investments, which align with LPs' growing demand for liquidity and risk mitigation.

Moreover, CD&R's focus on ESG integration and digital transformation has enhanced its appeal in an era where long-term sustainability and operational agility are paramount. By prioritizing sectors with structural growth potential-such as healthcare, technology, and industrial innovation-the firm is positioning itself to capitalize on macroeconomic shifts while preserving capital for its investors.

Why Strategic LP Commitments Outperform

The key to CD&R's success lies in its ability to maintain alignment with LPs through transparent communication and a shared vision. During crises, LPs often face liquidity pressures and heightened risk aversion. Firms like CD&R, however, demonstrate that a disciplined, operationally driven approach can mitigate these risks. For example, CD&R's capital preservation strategies-such as its use of operating partners with deep industry expertise-enable it to stabilize and grow portfolio companies even in volatile markets.

This alignment is particularly critical in 2025, where liquidity constraints and geopolitical uncertainties demand a more cautious approach to capital allocation. By committing to firms with proven resilience, LPs can access premium valuations and exit opportunities that less agile competitors may overlook. CD&R's ongoing discussions with LPs for its next fund suggest that investors recognize this dynamic, viewing the firm as a strategic partner rather than a passive capital provider.

Conclusion: A Defiant Signal of Confidence

CD&R's $26 billion Fund XII and its preparations for a follow-up fund represent more than just a fundraising milestone-they are a testament to the firm's ability to thrive in adversity. As the private equity market grapples with a new normal of constrained liquidity and macroeconomic uncertainty, the lessons from CD&R's historical performance and current strategies offer a roadmap for LPs seeking to outperform in downturns. By prioritizing operational excellence, sector-specific expertise, and long-term value creation, CD&R exemplifies how strategic commitments to resilient buyout firms can turn economic headwinds into opportunities.