Providence gears up to raise first Europe-focused growth fund

Providence Equity is preparing to launch its first European-focused growth fund that could raise up to 750 million euros ($835 million), two sources told Buyouts

The fund, which would be invested by its growth team, Providence Strategic Growth, could begin raising the Europe fund later this year, sources said. It is expected to officially launch the fund in Q1 2020, they said. 

Providence is in the midst of raising its fourth flagship growth fund, Providence Strategic Growth Partners IV, which is targeting up to $2 billion. That fund is expected to close later this year, possibly in the third quarter, one of the sources said. 

Providence Strategic Growth, formed in 2014, is led by CEO Mark Hastings and Chairman Peter Wilde. Both will have oversight over the European growth team, which will also include London-based Managing Directors Aldo Mareuse, who has been with the firm since May, according to his LinkedIn profile, and Dany Rammal, who has been with the firm since 2008, one of the sources told Buyouts

Providence Strategic Growth focuses on investments in lower middle market software and technology-enabled service companies, mostly in North America. It looks to make equity investments of $5 million to $75 million across mobile payments, business applications, security and network technology, and artificial intelligence, according to Providence’s Form ADV.

The growth funds have a targeted investment hold period of two to five years, the Form ADV said. 

Providence Strategic Growth raised $315 million for its debut fund. It collected $640 million in 2016 for Fund II, and $1.3 billion last year for Fund III.  

The growth group has produced strong returns. As of March 31, 2019, Fund I generated a 48 percent net internal rate of return; Fund II produced a 55 percent net IRR, and Fund III generated a 64 percent net IRR, sources said. 

Providence Equity managed about $19.6 billion overall as of March 31, 2019, the Form ADV said. 

Correction: A previous version of this report listed an older date on PSG’s performance numbers. The correct date is March 31, 2019. The report has been updated.

Action Item: See Providence’s Form ADV: