Late-stage VC Meritech hits market with fifth fund

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Meritech Capital Partners, a late-stage investor, is back in the market raising its fifth fund, according to two limited partners with knowledge of the fundraising.

The Pennsylvania State Employees’ Retirement System made a $25 million commitment to the Meritech fund earlier this month, according to an investment summary from the pension system.

The exact target on Fund V is unclear, though the two LPs said the firm is targeting somewhere in the range of the last fund. One of the LPs said Meritech could target up to $475 million. Meritech closed its Fund IV on $425 million in 2011.

Meritech, based in Palo Alto, Calif., did not return two calls for comment this week.

Fund IV was generating a 21.3 percent internal rate of return and a 1.28x multiple as of Sept. 30, 2013, according to performance information from the California Public Employees’ Retirement System.

Fund III, a $400 million vehicle raised in 2005, has performed even better than its successor. PennSERS, which committed $35 million to Fund III, reported that it had received $122.5 million in cumulative distributions as of Dec. 31. (Meritech has drawn down $34.4 million of PennSERS’ committed capital.)

Fund II, a $738.71 vehicle raised in 2000, was generating a 1.57x multiple as of March 31, 2013, according to Bison, which tracks fund performance from public LPs.

Performance data were unavailable for Meritech’s debut fund, which raised $1.1 billion in 1999.

Photo courtesy of ShutterStock

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