Francisco Scores Exit While Seeking $2 Billion

Francisco Partners appears to be burnishing its image with exits as it enters the final lap toward raising $2 billion for its third buyout fund.

The San Francisco technology shop has had $1.5 billion in realizations in the last couple of years and expects four more exits in the near future, Dipanjan “DJ” Deb, a co-founder and managing partner at Francisco Partners, said at the Buyouts West conference in San Francisco on April 15.

The firm promptly started making good on that promise. On April 22 it took public Mitel Networks Corp., an Ottawa, Ontario, maker of communications network equipment. Francisco Partners, which did not sell any shares in the IPO, saw its 21.5 million-share stake drop to 40 percent ownership after the IPO, down from its pre-offering level of 49.8 percent. Mitel’s sale of 10.5 million shares priced at $14 a share, below the initially anticipated range of $18 to $20. And shares soon fell further. By May 3, they were trading below $12.

Francisco Partners has raised $1.5 billion in commitments on its third fund and is on track for a $2 billion close in the next several months, Deb said at the conference. He would not comment further on fundraising.

The firm’s previous fund, the $2.3 billion Francisco Partners II LP, closed in 2006. Francisco Partners, which also has offices in London and Menlo Park, Calif., has $4.8 billion under management thanks to backing over the years from such investors as California Public Employees’ Retirement System, Henry J. Kaiser Family Foundation and the Illinois Municipal Retirement Fund.

Francisco Partners, established in August 1999, has 28 investment professionals on staff, including founding partners Deb, who previously was a principal at TPG; David Stanton, who led the technology investing activities at TPG from 1994 until August 1999; Benjamin Ball, formerly a vice president at TA Associates, where he led private equity investments in the software, semiconductor and communications segments; and Neil Garfinkel, formerly a managing director at San Francisco buyout firm Friedman Fleischer & Lowe.

The original Francisco Partners LP, a $2.5 billion fund that closed in 2000, has returned 1.21x and a 4.9 percent IRR as of Sept. 30, 2009, according to the Washington State Investment Board.