Firm: JMI Equity

Fund: JMI Equity Fund VII

Target: $875 million

Placement Agent: None

JMI Equity recently closed its seventh fund with $875 million in commitments, despite not yet exiting a company from its previous fund, a $600 million fund closed in 2007. It has only 3 of 21 investments from its fifth fund, a $300 million fund closed in 2005.

The Baltimore-based technology and software specialist closed the fund after a six-month fundraising campaign in a deeply challenging fundraising market, without the help of a placement agent. JMI Equity still has 15 percent of Fund VI left to invest, Harry Gruner, a managing general partner who co-founded the firm in 1992, told Buyouts. “In general I think the process went rather smoothly,” he said of the fundraising process.

The firm, which also has an office in San Diego, will continue its strategy of investing $10 million to $100 million in buyouts and growth equity investments in software, internet businesses, business services and health care information technology. Gruner said the firm expects to start investing from Fund VII in the first quarter of next year.

About 85 percent of JMI Equity’s investors re-upped on JMI Equity Fund VII. Investors include the Arizona Public Safety Personnel Retirement System, which committed $25 million; the New Mexico Public Employees Retirement Association, which committed $20 million; and the Pennsylvania State Employees’ Retirement System, which committed as much as $10 million. New investors included the State of Wisconsin Investment Board.

Some of JMI Equity’s recent exits have been blockbusters. In 2008, for example, Google paid $3.1 billion to acquire online marketing company DoubleClick, which Hellman & Friedman LLC bought in 2005 for $1.1 billion with JMI Equity as a minority investor.

JMI Equity’s fifth fund also has distributed a lot of investment capital. Of the $30 million the California State Teachers’ Retirement System committed to Fund V, about $27.7 million has been drawn down, and about $22.9 million distributed, or returned to CalSTRS, generating an internal rate of return of 21.88 percent as of March 31. “We’ve returned a substantial amount of capital and fund VI is tracking very well too,” Gruner said.

JMI Equity Fund IV LP, a 1999 pool, posted a 4.5 percent IRR and a 1.3x investment multiple as of March 31, according to the California Public Employees Retirement System.

A prominent fund-of-funds manager said it’s no shocker that JMI Equity was able to raise the fund so fast despite the challenges. “JMI has a loyal following,” he wrote in an e-mail. A placement agent who has helped the firm raise capital in the past added, “They do really interesting deals, where they are considered the experts in software and services.”

Luisa Beltran, a senior private equity reporter at peHUB, contributed to this report.

Correction: The headline on the original version of this story incorrectly stated that JMI Equity has lacked in recent exits. The fifth paragraph also incorrectly stated that JMI Equity has lacked in recent exits.