TA Associates Shakes $3.5 Billion from Investors

With its existing $800 million domestic private equity fund nearing full investment, TA Associates is putting the finishing touches on a ninth vehicle that will rank among the largest private equity fund to date.

Although existing limited partners have already made commitments upwards of $3.5 billion, the final capitalization will not exceed the $2 billion mark, said Laura Kim, vice president of marketing and communications at TA. It will hold a final close by the end of the month, with university endowments, pension funds, foundations and foreign banks all taking major pieces of the commitment action.

“The LPs have gotten a very consistent track record,” Kim said. “They wanted to put more money to work.”

The fund’s investments will likely mirror TA’s earlier deals in that they will focus on Internet infrastructure, information technology services and software, and make additional investments in the healthcare, consumer and financial services sectors. TA 9, like its predecessors, will take minority positions in its portfolio companies by acting as lead investor on a deal but taking less than 50% of the company’s total equity.

One slight strategy shift, however, will be that TA 9 will focus primarily on late-stage plays, with investments falling within the $40 million to $50 million range, while previous TA vehicles gave serious consideration to early-stage deals.

“This will have a larger appetite for larger deals,” Kim said. “It’s more attractive to put $50 million to work than $10 million, but that doesn’t mean we’ll turn away an attractive $10 million deal.”

TA 9 will also venture into buyouts of later stage technology companies, pumping up to $200 million into each of those deals. To date, the firm has $3 billion under management, with 330 companies in its portfolio. Previous investments include Federal Express, Jenny Craig and SBA Communications.

With the close of the new vehicle, the firm’s capital under management nearly doubles, forcing it to add professionals at all levels – from principals to vice presidents – to its roster of 30 investment pros.

“We’re maintaining a disciplined approach to investing,” Kim said. “We don’t want to overextend ourselves. We’ll stick to our knitting. We don’t want to double the firm either.”