Accel-KKR is on track to raise around $1.25 billion for growth fund
Summary
- The firm makes minority investments in smaller software and technology-enabled services companies with its growth funds
Technology investor Accel-KKR is raising more than $1 billion for a new growth capital fund and is expected to hold a final close for it in the next month, according to a person familiar with the fundraising.
The Menlo Park, Calif.-based firm is poised to raise around $1.25 billion for Accel-KKR Growth Capital Partners IV LP, according to people familiar with the situation, noting the firm first targeted $850 million for the fund. The multistrategy investor manages more than $10 billion of committed capital, according to its website.
Through its growth-capital strategy, Accel-KKR makes minority preferred equity, subordinated debt and other types of investments in smaller software and technology-enabled services companies with more than $10 million in revenue, according to a regulatory filing. With its growth funds, the firm focuses on investing in founder- and family-owned businesses, making it often the first institutional investor in companies, the regulatory filing said.
The firm’s previous fund for the strategy, Accel-KKR Growth Capital Partners III LP, closed in 2019, collecting some $685 million.
Accel-KKR’s latest growth fund has received investments from the Merced County Employees’ Retirement Association in California and the Texas County & District Retirement System, according to pension documents.
Accel-KKR’s fundraising comes after a year in which many private-equity firms piled into the technology sector searching for deals. The strong performance of tech-sector investments throughout the pandemic and the cash flows created by subscription-based software’s recurring-revenue models continue to attract private equity.
Announced U.S. tech deals involving private equity totaled $401.71 billion last year through mid-December, including new purchases, asset sales and add-on deals, according to data provider Dealogic. That amount was the highest for any year on record since Dealogic started collecting the data in 1995.
Accel-KKR has plenty of company looking for deals in the sector: New firms and strategies targeting technology have been popping up with some consistency in recent years, and some of the biggest U.S. buyout firms, such as Thoma Bravo and Vista Equity Partners, focus on the sector.
Earlier this month, recently formed Recognize Partners said it had collected some $1.3 billion for its first fund. Recognize will focus on technology-services companies and can make bets on earlier-stage businesses and emerging technologies as well.
This story has been published from a wire agency feed without modifications to the text
