Side Letter: October’s biggest funds, tech investing key trends, Eurazeo earnings

Tech fundraising continues apace with around $50 billion raised in the first nine months of this year – a 47 percent rise on the whole of 2018. As we detail in our tech special this week, the industry is a broader, deeper market than it has ever been. Here’s today's brief, for our valued subscribers only.

Just happened

Tech trends, demystified

“Technology is now core to pretty much every business,” Apax Partners’ Salim Nathoo tells us in our just-released Investing in Technology special report. Tech is no longer an investment vertical; it’s a horizontal. But as much as GPs and LPs alike want in, the breadth and depth of this market can make investing in technology a complex and overwhelming proposition. Check out seven things you need to know about investing in technology.

October’s largest funds

Fundraising is gathering steam in Q4 after the lowest three-quarter fundraising figure since 2015. The 10 largest funds closed in October gathered $53.5 billion among them, the most collected during a single month so far this year. Head of the pack was Permira with its €11 billion seventh flagship fund. If the industry continues at this rate, the three months to the end of the year will comfortably outstrip the $134 billion raised in the fourth quarter of last year.

Howdy partner

Partnerships with other investment firms is paying off for Paris-listed Eurazeo. Total management fees in the first nine months of this year rose by 14 percent to €151 million, “spurred by management fees billed to investment partners”, the firm reported on Friday. The firm’s flagship Capital and SME-focused PME funds helped pushed revenue up almost 10 percent amid an “uncertain environment”, chief executive Virginie Morgon said. Check out our profile on Eurazeo – one of three firms taking the PE world by stealth.

Essentials

Insight performance (and vice versa). Insight Partners is back in market with its 11th fund targeting $7.25 billion. The firm refined its investment strategy from Fund VII to focus on software-related investments. Our performance watch shows the firm’s predecessor funds have generated IRRs in the high-teens and strong TVPIs for their investors. Insight recently opened its first international office in Tel Aviv and has committed more than $700 million across 15 opportunities in Israel.

LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.

Dig deeper

New vistas for NYSCRF. New York State Common Retirement Fund has agreed to commit $500 million to Vista Co-Invest Fund 2018, which will invest in enterprise software opportunities in North America. Here’s a breakdown of the $210.28 billion US public pension fund’s total investment portfolio. For more information on NYCRF, as well as more than 5,900 other institutions, check out the PEI database.

He said it

“If you look at credit spreads, valuations on public equities or private equities and then where we are in the cycle, late in a 10- or 11-year expansion, it is concerning.”

Marcus Frampton, chief investment officer at Alaska Permanent Fund, tells Bloomberg there are red flags that could indicate a turn in the bull market.


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Today’s letter was prepared by Isobel MarkhamAdam LeCarmela Mendoza and Preeti Singh.


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