Summit Set To Close Growth Fund At $2.5B

Firm: Summit Partners

Fund: Summit Partners Growth Equity Fund VIII

Target: $3 billion

Amount Raised: $2.5 billion

Summit Partners was expected to close its latest growth equity fund at $2.5 billion in early October, several sources told sister Web site peHub.

Boston-based Summit began fundraising for the fund in March with a $3 billion target. The firm decided to reduce the size of the pool long ago, one person said. Summit has enough dry powder from a current fund that it felt it had enough capital, the source said. An LP said that Summit’s past performance has been strong.

However, one buyout executive said Summit was seeing insufficient demand for the fund at $3 billion. Summit’s last growth equity fund also raised $3 billion in 2005. The fund, Summit Partners Private Equity VII-A LP, has generated an IRR since inception of 1.3 percent, according to Sept. 30, 2010, data from the California State Teachers’ Retirement System.

The Boston firm has two other funds in the market right now, sources said A venture capital fund is raising $500 million and is oversubscribed, sources said. Summit’s prior venture fund raised $300 million in 2005. The pool, Summit Partners Venture Capital II-A LP, has an 8.66 percent IRR, CalSTRS reported.

Summit also has a credit fund in the market, but it was not clear how much that fund has raised or what stage the firm had reached in fundraising.

Summit is investing $6 billion globally, according to the firm’s Web site. In the past month, the very active firm has done several deals. Summit made growth equity investments in Zenith RMM, CareCentrix, PeerApp and Access Information Management.

Pennsylvania’s Public School Employees Retirement System, which is investing in both the growth equity and venture funds, said in August that Summit’s “7 prior core Summit Funds have invested $5.6 billion and have generated total value of $15 billion or 2.7x invested capital.”

Executives at Summit declined comment.

(Luisa Beltran is a senior writer for peHub.)