Francisco scores exit while seeking $2B

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-based 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, 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, the firm took public Mitel Networks Corp., an Ottawa, Ontario-based 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% ownership after the IPO, down from its pre-offering level of 49.8 percent. Mitel sold 10.5 million shares in the IPO, priced at $14 a share, below the initially anticipated range of $18 to $20 a share. And shares soon fell further. By May 3, they were trading below $12 a share.

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 about the fund-raising.

The firm previously raised $2.3 billion for Francisco Partners II, which 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 co-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-based buyout firm Friedman Fleischer & Lowe.

The debut Francisco Partners fund, a $2.5 billion vehicle that closed in 2000, has returned 1.21x and a 4.9% IRR as of Sept. 30, 2009, according to the Washington State Investment Board. —Steve Bills