Providence targets $10B for new buyout fund

Providence Equity Partners is raising $10 billion for a new fund, just two years after raising its previous vehicle, say two people familiar with the situation. It’s the firm’s sixth fund and a huge step up from its $4.25 billion fifth fund, which closed in the fall of 2004.

The $10 billion target is the latest example of mega buyout funds returning to market rapidly after raising sizeable funds within the last few years. For instance, Bain Capital re-upped with an $8 billion ninth fund this year, along with a $2 billion co-investment fund, after raising $3.5 billion in 2004. Goldman Sachs Capital Partners, meanwhile, is rumored to have quickly unloaded the $8.5 billion it raised in 2004 and be targeting around $10 billion for its sixth fund.

Providence’s 2004 fund was rapidly raised. Demand for the fund was so high that the that firm didn’t even have to send out a PPM, let alone hire a placement agent, according to a story at the time that was published in Buyouts, a related publication to PE Week.

Details weren’t immediately available on what stage the current fund-raising drive is in or how quickly it will proceed. Calls to a spokesman and to Providence Equity weren’t immediately returned. Previous Providence limited partners include the Ontario Teachers’ Pension Plan, TIAA-CREF, Rhode Island State Treasury and Harvard Management Co.

Providence, which is based in Providence, R.I., and which focuses on media and communications companies, has been part of some of the most publicized deals in recent private equity history and is known for its penchant for club deals. Last week, the firm was part of the investor group that purchased Spanish-language broadcaster Univision Communications Inc. for $12.3 billion.

Other recent transactions include Providence combining with Goldman for the largest ever education deal, the $3.4 billion buyout of Education Management Corp. It also was in the club deals for PanAmSat Corp, Freedom Communications, Metro-Goldwyn-Mayer and Auna Group’s fixed-line and cable business. It went solo this year with the $500 million buyout of Kabel Deutschland.

Providence also was in the news earlier this year over a lawsuit with ABRY Partners that stemmed from the sale of F&W Publications. The two firms settled the lawsuit in the spring, weeks before a trial was set to begin. The litigation began in late 2005 when ABRY sued Providence, alleging fraudulent conduct and misrepresentation in relation to ABRY’s $500 million acquisition of Providence portfolio company F&W, a publisher of specialty magazines.

Terms of the settlement were confidential, but PE Week obtained a letter sent to limited partners that said that Providence will invest in F&W and have the right to designate a board member.