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Francisco Partners V could raise up to $3.75 bln

  • Francisco IV a top-quartile fund, per Nebraska IC
  • New fund targets $3.25 bln, cap $3.5 bln to $3.75 bln
  • Firm employs “modest leverage,” Nebraska memo says

Francisco Partners could raise as much as $3.75 billion through its latest flagship fund, almost $1 billion more than what the San Francisco private equity firm raised through its predecessor, documents released by Nebraska Investment Council show.

Francisco Partners V is targeting $3.25 billion with a hard cap of $3.5 billion to $3.75 billion. Limited partners will pay a 1.5 percent management fee on committed capital during the fund’s investment period and 1.25 percent afterward.

The terms are consistent with what was offered to LPs with Fund IV, which held a final close on $2.875 billion in 2015.

Nebraska committed $50 million to Fund V at its Sept. 14 meeting, State Investment Officer Michael Walden-Newman wrote in an email. The $25.4 billion public investment fund previously committed $20 million to Francisco Partners IV in 2014.

Fund IV was netting a 10.6 percent internal rate of return, Nebraska documents say. Nebraska staff noted Fund IV’s performance qualifies it among the top 25 percent of 2015 vintage funds.

The firm’s second and third flagship funds were netting IRRs of 10.5 percent and 19.5 percent, respectively, according to the Nebraska memo.

As with its previous funds, Francisco Partners will use Fund V to make control acquisitions of technology companies located in the U.S. and other developed markets. Typical portfolio investments will have enterprise values of $100 million to $500 million.

The firm tends to use “modest leverage” with its acquisitions, typically in the 3x range, Nebraska’s memo says. The firm had roughly $10.3 billion under management, the memo says.

Last year, Francisco Partners closed its debut Agility Fund on $600 million for investments in smaller tech companies.

Francisco Partners did not respond to requests for comment.

Action Item: For more information on Francisco Partners, visit www.franciscopartners.com