BayPine, a hot new name in tech private equity, raises $1.5bn for Fund I

Primed by a vigorous deal environment, tech PE fundraising rose to dizzying heights in 2021, with 474 North American vehicles collecting an all-time high of $227bn, according to Buyouts data.

BayPine, led by former Silver Lake and Blackstone executives, secured more than $1.5 billion for a debut buyout offering, amid record tech fundraising in the North American market.

The amount raised by BayPine Capital Partners Fund I and a sidecar vehicle was disclosed in Form D documents recently filed by the Boston private equity firm. The placement agents are Alvine Capital, Brooklands Capital Strategies and Stifel.

The fund’s target is $2 billion, the Wall Street Journal reported, suggesting that BayPine is approaching a final close.

Primed by a vigorous deal environment, software/tech PE fundraising rose to dizzying heights in 2021. Some 474 North American funds collected an all-time high of $227 billion, according to Buyouts data, up 14 percent from the prior peak of $200 billion raised in 2020.

Last year’s tally builds on robust fundraising since 2016. The mega-funds of tech pioneers like Thoma Bravo, Vista Equity Partners and Silver Lake were key to this trend line, as were the first-time vehicles of a new generation of dedicated investors, such as BayPine.

BayPine was founded in 2020 to invest in tech disruption in traditional sectors of the economy. Its top principals are managing partner David Roux, a founder and former co-CEO and chairman of Silver Lake, and managing partner Anjan Mukherjee, an ex-senior managing director with Blackstone.

The firm’s strategy is to make long-term control investments in upper mid-market companies in healthcare, consumer, specialty industrials and business services sectors. Target opportunities have EBITDA of $50 million to $300 million, Bloomberg reported.

Deploying what it calls a “Renovate, Innovate and Accelerate” program, BayPine aims to drive comprehensive digital transformation in portfolio companies. Value creation initiatives focus on areas like talent, strategic growth, operational improvements, digital architecture design, acquisitions, product development and new markets.

Few other details of the strategy are publicly available. BayPine, however, recently made several investments that perhaps give some hints.

They include a major deal done last year. BayPine led a consortium to buy Mavis Tire Express Services, a provider of tire, oil change and mechanical services, from Golden Gate Capital. The deal was valued at more than $6 billion, including debt, Reuters reported. The consortium partnered with TSG Consumer Partners.

BayPine also in 2021 struck a deal to acquire Pinnacle Dermatology, a dermatology management services organization backed by Chicago Pacific Founders. In addition, the firm and Two Sigma Impact invested in Penn Foster, a digital learning platform previously backed by Bain Capital Double Impact.

Roux and Mukherjee oversee a senior bench that includes four founding partners. They are Brian Frank, a Declaration Partners managing partner; Marius Haas, until 2020 Dell’s president and CCO; Stephen Ko, an ex-KKR managing director; and Wan Ling Martello, a one-time C-level executive who worked at Nestlé and Walmart.

Covid-19 accelerated digitalization that companies were already bringing to customer and supply-chain interactions, internal operations and product portfolios. In the process, it significantly increased tech’s role and influence in PE dealmaking and fundraising.

“Software is everything,” Thoma Bravo managing partner Seth Boro told Buyouts last year. “It’s not a vertical. Every business in every industry in every geography runs on software.”

BayPine declined to provide a comment on this story.

(This story was updated to correct the date of the Penn Foster deal.)