Billionaire Plots $1B Fund

Symphony Technology Group, the Palo Alto-Calif.-based private equity firm that focuses on software and services companies, is in the early stage of plotting its second fund supported by outside investors, two sources familiar with the firm’s plans told Buyouts.

The firm might seek as much as $1 billion, both sources said. The firm is “testing the temperature” of existing investors before formally launching a fundraising campaign, the one source said.

Billionaire entrepreneur Romesh Wadhwani launched Symphony Technology Group in 2002 after amassing a fortune following the sale in 2000 of an e-commerce company he founded called Aspect Development Inc. for $9 billion. He’d also founded at least two other companies prior to starting Symphony Technology.

Upon launching Symphony Technology, Wadhwani, who holds a Ph.D. in electrical engineering, invested in several companies, largely with his own money. By September 2008, that portfolio had a combined market value of $1.5 billion. In 2007, Wadhwani put up $400 million for the firm’s first institutional fund, Symphony Technology Group III LP, which raised $500 million from outside investors such as Princeton University, TIAA-CREF and the Oregon State Treasury, according to the Dow Jones Director of Alternative Investment Programs.

Today, Symphony Technology’s Web site boasts of a portfolio with 14 companies that have combined revenue of $2.5 billion and 15,000 employees in North America, Europe and Asia. Holdings include Aldata Solutions, a provider of supply chain software for retail, wholesale and logistics companies; Shopzilla Inc., a manager of online shopping brands the firm bought earlier this year for $170 million; and Teleca, a supplier of software services to the mobile device industry. The firm also has several investment professionals.