Summit Partners, the Boston-based growth equity firm, expects to hold a first and final close on its 10th growth equity vehicle in February, US pension documents show.
The North America-focused firm has a $4 billion target for Summit Partners Growth Equity Fund X, according to a 19 December investment memorandum from Pennsylvania Public School Employees’ Retirement System.
The pension’s investment staff believe Fund X will be oversubscribed, with total commitments “likely to be between $4.5 billion and $5 billion”.
PSERS has made a $150 million commitment to the vehicle, according to a 17 January board meeting document.
The University of South Alabama is mulling a commitment to Fund X, according to August 2018 investment committee documents, although the amount is undisclosed.
The firm will commit at least 5 percent to the fund, the PSERS document revealed.
Summit Partners could not be reached for comment by press time.
Similar to its previous funds, capital raised for Fund X will be invested across the firm’s primary sectors in North America: technology, healthcare and life sciences, and growth products and services such as business services, financial services, consumer and industrial technology. Typical investments for the firm are between $75 million and $300 million.
The fund’s predecessor gathered $3.3 billion in April 2017. Fund IX delivered a 65.8 percent internal rate of return and a 1.3x investment multiple, while the 2012-vintage $2.7 billion Fund VIII generated a 24.9 percent IRR and 1.85x multiple as of 31 March 2018, according to documents from PSERS.
Growth capital investing, which accounted for over 11 percent or $41 billion of capital raised in 2018, is set to grow this year according to PEI’s LP Perspectives survey. Twenty-nine percent of LPs surveyed plan to increase their allocation in 2019.
Blackstone is one of the firms looking to capitalise on investors’ increasing appetite for growth investing. This month the firm launched its growth equity platform, which will provide “capital to companies during the critical phase between venture capital investments and traditional buyouts”, it said in a statement. The firm hired Jon Korngold, former global head of financial services and healthcare at growth equity firm General Atlantic, to lead the business.