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Providence targets $5 bln for flagship Fund VIII

  • Fund VIII has $6 bln cap
  • Wisconsin committed to Fund VIII in Q1
  • Providence had several recent exits

Providence Equity Partners is targeting $5 billion with a $6 billion cap for its next flagship fund, according to two people with knowledge of the firm.

Exactly when Providence launched Fund VIII is unclear.

Providence had a tough time raising Fund VII, which closed in 2013 on a reduced target of $5 billion. That was a 59 percent drop from the firm’s boom-era Fund VI, which closed on $12.1 billion in 2007. Fund VI was generating a 6 percent net IRR and a 1.3x multiple as of June 30, 2016, performance information from California Public Employees’ Retirement System shows.

At the time, Providence admitted mistakes with Fund VI and pledged not to get involved with any more consortium deals, PE HUB reported at the time.

Fund VII is a stronger performer, generating an 11.3 percent internal rate of return and a 1.24x multiple as of Sept. 30, 2016, performance information from Oregon Public Employees Retirement Fund shows.

Providence was formed in 1989 as a sector specialist, focused on media, communications, education and information.

Providence sold Professional Association of Diving Instructors for a reported $700 million earlier this year and made $425 million on its sale of Learfield Communications, The Wall Street Journal reported in October. Its sale of Ascend Learning in April 2017 brought in roughly $1 billion of profit. A source familiar with the firm pegged all three deals as generating returns of roughly 3x each.

The firm has developed new fund families over the years. It closed its second growth fund on $640 million late last year. Providence Strategic Growth Capital Partners fund targets lower-middle-market software and tech-enabled-service companies, mostly in North America.

Providence’s credit affiliate, Benefit Street Partners, is out with its fourth fund, targeting $1.75 billion.

The firm, led by Jonathan Nelson, sold a minority stake to Dyal Capital Partners in 2014. As of Dec. 31, 2016, Providence managed about $16.2 billion in client assets on a discretionary basis.

State of Wisconsin Investment Board committed $100 million to Fund VIII in the first quarter, Buyouts reported.

Sam Sutton contributed to this report.

Action Item: Providence’s Form ADV: http://bit.ly/2osWpKZ

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