Insight targets $2bn for ‘buyout annex’ fund alongside Fund XII

Insight Partners is raising a buyout fund to invest alongside its twelfth growth equity flagship fund, according to pension documents, with both eyeing a first close by the end of the month.

The buyout fund is the latest in a flurry of vehicles Insight has brought to market amid a tech sector windfall fueled by the coronavirus pandemic.

Insight Partners XII Buyout Annex Fund, LP is targeting $2 billion, according to documents from Massachusetts Pension Reserves Investment Management Board. It will make leveraged buyout investments and will co-invest alongside Fund XII.

It was unclear whether this meant the fund would charge no fees or carry, as is standard for co-investments, would take control positions in companies, or would make investments separate from the flagship.

The firm filed Form Ds this week that indicated it had raised $66.8 million in co-investment vehicles alongside the flagship, suggesting the Buyout Annex fund was more than a co-investment vehicle.

The firm also filed Form Ds for a co-investment vehicle alongside the Buyout Annex fund and several different pools for it as well. Insight did not respond to a request for clarification.

MassPRIM private equity director Michael McGirr referred to the fund as a “continuation” of the flagship at the pension’s Wednesday board meeting, but provided no further details. The meeting documents said staff expected a first close for both funds this month.

Insight Venture Partners XII, the flagship fund, is targeting $11.5 billion, although the Wall Street Journal reported it may target more than $12 billion.

This was a rapid return to the market for Insight, which had just closed Fund XI in April 2020 on $9.5 billion. What is more, the firm also raised a preferred equity vehicle during the height of the covid pandemic. That fund targeted $875 million, as Buyouts reported, and ended up raising $1.56 billion and closing in April.

The firm is also raising a follow-on fund for its tenth vehicle, which is targeting $1.3 billion, according to the MassPRIM documents.

The follow-on fund will make additional investments in companies from that fund, Buyouts reported, and is part of a larger trend of managers seeking to hold valuable assets for longer.

This fund is expected to close in “spring 2021,” according to the MassPRIM documents.

Technology-centered funds have attracted intense LP interest, as it was one of the sectors that saw its opportunity set grow during the covid market disruption last year as millions shifted to remote work.

Fund XII will focus on growth-stage software, software-enabled services and internet businesses.

MassPRIM ended up committing to all three vehicles. $150 million went to Fund XII, $50 million to the Buyouts annex fund and $75 million to the follow-on fund, for a total of $275 million going to the firm.

Action Item: read the materials for the May 26 MassPRIM board meeting here.