Accel-KKR on track to raise around $1.25bn for growth fund

Jan 20, 2022 | News

Technology investor Accel-KKR is raising more than $1bn for a new growth capital fund and its final closing is expected next month, according to a person at the fundraiser.

Menlo Park, Calif.-based firm Accel-KKR is on track to raise about $1.25 billion for Growth Capital Partners IV LP, according to people familiar with the situation. 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. The regulatory filing said that with its growth fund, the firm focuses on investing in founder and family-owned businesses, making it often the first institutional investor in companies.

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The firm’s previous fund for strategy, Accel-KKR Growth Capital Partners III LP, closed in 2019, collecting some $685 million.

According to pension documents, Accel-KKR’s latest development fund has received investments from the Merced County Employees Retirement Association in California and the Texas County and District Retirement System.

Accel-KKR’s fundraising comes a year after several private-equity firms piled into the technology sector in search of deals. The strong performance of tech-sector investments during the pandemic and the cash flows created by the recurring-revenue model of subscription-based software continue to attract private equity.

As of mid-December last year, US tech deals involving private equity were announced, including new purchases, asset sales and add-on deals, according to data provider Dealogic. The amount was the highest for any year on record since Dealogic began collecting data in 1995.

Accel-KKR has a number of companies looking for deals in this area: new firms and strategies targeting technology have been popping up with some consistency in recent years, and some of the largest US buyout firms, such as Thoma Bravo and Vista Equity Partners, focus on the sector.

Earlier this month, recently formed Recogniz Partners said it had raised about $1.3 billion for its first fund. Recognize will focus on technology-services companies and may also bet on first-stage businesses and emerging technologies.

Source: Bharat Times

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