Last week,
Neither Francisco Partners nor Sequoia responded to requests for comment.
But it’s worth taking notice whenever Sequoia Capital and Francisco Partners get together to do a deal. After all, the two titans of tech finance are establishing quite a track record of co-investing, having partnered on five previous deals.
The firms more than doubled their $42 million investment they made in publicly held Blue Coat Systems (Nasdaq:BCSI) in June 2006. They bought in at $17.5 per share and liquidated the position during September 2007 when the stock was trading at or above $40 per share.
Another example is Magnachip Semiconductor, which has registered to go public in a $575 million offering. Sequoia and Francisco spun the company out of Hynix Semiconductor with help from
Venture capitalists are starting to see more deals like this as mezzanine private equity and boutique buyout shops move “upstream” to hunt for bigger deals.
“We are starting to see more and more of these opportunities,” says
“These were different kinds of deals than what we do in the early stage,” he says.
“The traditional players that would have mined these deals have gone upstream,” Dyal adds. “In the Internet area, for example, the cost of getting these businesses off the ground is much smaller than it used to be. We’re seeing more deals that reach critical mass without much money or the traditional early stage venture capital syndicate.” —Alexander Haislip