Investcorp Technology Partners raises $500m

Investcorp capitalises on investor appetite for growth buyouts as credit markets close the door on mega deals for now.

Investcorp Technology Partners, a growth buyout investor, has closed its latest fund with $500 million in total committed capital ahead of its original target of $400 million.

The firm’s previous fundraising garnered $300 million for Investcorp Technology Ventures II, ITP’s second fund, which closed in 2005. 

Savio Tung, head of Investcorp Technology Partners, said the change in name confirmed a shift in strategy, which was well under way with the second fund. He said: “Back in 2004 it was clear what the opportunity was. Technology buyouts were however less well understood and investors did not appreciate it. Now is an appropriate time to change the name.”

The fund will focus on three types of transactions – buyouts, corporate carveouts and take-privates or control-oriented PIPEs (private investments in public equity) – in four key areas of the technology market: mobile data applications, enterprise software, communications infrastructure and digital content enablement.  Its focus is Europe and the US, though the team can invest up to 15 percent of the fund elsewhere.

Tung said the top 500 global technology businesses are active in M&A, constantly acquiring and selling non-core units. “Our target companies have revenues of between $50 million and $150 million and are considered small. They are the cheapest to buy and easiest to sell,” he said.

Investcorp said the latest effort received strong support from a diverse group of institutional, individual and family trust investors globally in addition to a significant financial commitment from Investcorp. 

In the US, its investors included Grove Street Advisors for the California Public Employees’ Retirement System, Cornell University, the Doris Duke Charitable Foundation, QVT Financial LP and Broward Health; in Europe, investors included AlpInvest Partners, Bank of Scotland, CNP Assurances SA and UBS Sauerborn. 

ITP’s own team committed more than $11 million to the fund. The firm has around $1 billion under management.

Existing deals include Dialogic, which it bought in partnership with Eicon Networks. ITP created Dialogic from Intel’s media and signaling business in September 2006, leading the $35 million equity round and arranging $65 million in additional financing. 

In July and November 2007, ITP acquired Zustek, a provider of e-mail marketing solutions, and Adverb Media, a full-service interactive marketing agency.  The merger of these companies formed Zeta Interactive, a provider of a wide range of digital services including e-mail, search, website development, and creative and business intelligence.

Investcorp is currently raising a traditional buyout fund to complement its deal-by-deal fundraising for investments. It is also raising its first fund to invest in its home markets in the Gulf.