Francisco Partners launches debut small-company fund

Francisco Partners Management LP recently told its limited partners it’s launching a new fund, called Agility, with a $500 million target aimed at smaller tech deals, according to sources.

The size range of deals on which the Agility fund will focus is unclear. A spokesman for Francisco Partners declined to comment.

The San Francisco growth-equity and buyout specialist is following others in the space such as Thoma Bravo and Vista Equity Partners with smaller tech-oriented funds underneath multibillion-dollar flagship vehicles.

Francisco Partners’ most recent flagship fund, Francisco Partners IV LP, closed on $2.86 billion in commitments, the firm said in February 2015. That pool targets middle-market tech companies in the U.S., Europe and Israel with transaction values of $50 million to $2 billion, the firm said at the time.

It’s also unclear whether the Agility fund’s deal team will be the same as the one for the firm’s flagship fund. The firm’s leadership includes CEO Dipanjan (DJ) Deb, Co-Presidents Ezra Perlman and Deep Shah, and Chief Investment Officer David Golob.

A separate GP in the tech space said one motivation for a smaller fund is to seek greater returns that smaller companies often present. With fierce competition for larger deals pushing up purchase-price multiples, LPs have been concerned about squashed returns from recent vintage years.

Meanwhile, Vista Equity is marketing Vista Foundation Fund III, which is targeting $2.5 billion to invest in companies with enterprise values of $100 million to $500 million. Vista’s most recent flagship fund, Vista Equity Partners Fund VI, is targeting up to $10 billion. A spokesman for Vista declined to comment.

In February, Thoma Bravo closed Thoma Bravo Discover Fund with $1.07 billion in commitments for companies with $30 million to $150 million in revenue, after only six months on the fundraising trail.

AJ Rohde , a partner at Thoma Bravo, is leading the deal team for Discover. Many of the LPs in the fund saw their allocations pared back in the face of strong demand.

Thoma Bravo is in the market with its flagship Thoma Bravo Fund XII with a target of $7 billion, nearly twice the $3.7 billion it raised for Fund XI. A spokesman for Thoma Bravo didn’t comment.

While Vista, Thoma Bravo and Francisco Partners more recently launched tech-focused smaller funds, younger sibling funds have already come from generalist buyout firms.

H.I.G. Capital and Carlyle Group, for example, both launched middle-market funds as their flagship funds grew larger.

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