More on Elevation Partners, Including a $210 Million Facebook Investment

Kevin Albert’s departure from Elevation Partners yesterday spurred a lot of talk about the media-focused PE shop’s performance and future.

Since I’ve never really covered them, I just wanted to get some things straight about Elevation. The buyout shop invested $300 million into Forbes, $460 million into Palm and $210 million into Facebook (through two investments: $120 million in November 2009 and $90 million this past spring) and committed to invest up to $100 million to Yelp for about 20%. Another $100 million is going to Pandora, the Internet radio station provider, a source says.

  • Elevation Partners will not be marketing for a second fund anytime soon. If it does, it will likely occur after a successful exit or two, the source says (the fund will likely be smaller than the first and with existing investors, one PE exec says).
  • Elevation raised $1.8 billion with its first fund in 2005. After accounting for reserves (which firms typically use for potential portfolio infusions), Elevation has about $100 million left to invest.
  • Once Pandora closes (and it isn’t clear when that will happen), don’t expect Elevation to invest in any portfolio companies in the near future, a source says.
  • Elevation did not get an extension on investing the $1.8 billion fund, which confirms an earlier story from TechCrunch.
  • Paper returns for the Facebook investment have it at 2.5x returns (but paper returns don’t mean much in this environment). Cost basis is about $29 a share.  “With Facebook trading at the levels it’s currently trading at, the fund is slightly better than break even,” the source says. This compares to the Oregon Public Employees Retirement Fund which says the Elevation fund posted a -9.9% IRR as of March of this year.
  • Elevation has had a successful exit. In late 2007, Electronic Arts bought VG Holdings, which owns BioWare Corp./Pandemic Studio, from Elevation for $860 million. The PE firm invested $300 million and the exit was valued at 2x return, a source says.

Officials for Elevation declined comment.