Prov Equity Begins Discussing New Fund

Aug 4 (Reuters) – Private equity firm Providence Equity Partners has had initial talks with investors about raising a new global private equity fund which could be up to $8 billion in size, a source familiar with the situation said on Wednesday.

The private equity firm has mostly invested its last major buyout fund, raised in 2007, according to a recent report by London-based private equity research firm Preqin. Preqin’s report said that as of March 31 Providence had invested about 70 percent of the fund.

Providence, which focuses on media and communications deals, has been active on the deal front this year. One of Providence’s subsidiaries, Altegrity recently bought Kroll Inc in a $1.13 billion deal, and Providence also recently bought education provider Study Group for $570 million.

The private equity firm has not yet sent a private placement memo (PPM) about the fund to investors, the source said, and no official target has yet been decided. Firms send out PPMs to detail investment plans prior to launching funds.

Providence could not be immediately reached for comment.

The news was first reported by Bloomberg.

Private equity firms raise capital from investors such as pension and endowment funds, and commit to investing that capital in a certain period of time, typically five years.

Finding places to invest money has been a challenge as the credit crisis restricted access to cheap financing for deals and the economic outlook was grim.

Buyout firms typically buy companies using a high level of debt, meaning that when financing dries up, it is hard for them to strike deals. (Reporting by Megan Davies; Editing by Richard Chang)