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Bain Capital hits target for tech fund with nearly $1.1bn, plans to keep raising

Bain Capital was targeting $1bn, with the firm kicking in an additional $100m to invest in North American growth-stage and mid-market tech companies.

While Bain Capital appears to have met the target for its new technology offering, the firm has not yet held a final close, according to person with knowledge of the matter, as as reported by sister title Buyouts.

Bain Capital Tech Opportunities Fund secured $1.07 billion, according to a regulatory document. It is now ahead of its $1 billion target, reported last October by Buyouts. Bain intended to commit a further $100 million, bringing the total to $1.1 billion.

It is not known if the amount raised accounts for Bain’s commitment. The offering’s hard cap is also not known. The Boston private equity firm declined to comment.

Bain last year unveiled the tech opportunities fund and strategy. The initiative is led by managing director Darren Abrahamson, a 15-year Bain tech investor.

Abrahamson assembled a starry leadership team. Recruits in 2019 included partner Scott Kirk, formerly with TCV, and partner Hans Sherman, formerly with Goldman Sachs. Managing director Dewey Awad also came over from Bain Capital Public Equity. This year, ex-Bain executive Philip Meicler rejoined from Hellman & Friedman as a managing director.

Bain created the fund to invest in North American growth-stage and mid-market tech companies. It will source deal flow in five sub-verticals – application software, infrastructure and security, fintech and payments, healthcare IT, and internet and digital media – sometimes alongside affiliates like Bain Capital Ventures.

In an April interview with Buyouts, Abrahamson said the fund will focus on “emerging upstarts” and other tech businesses overlooked by investors. Examples include companies that previously bootstrapped their growth and “ex-highflyers” needing help adjusting their strategies.

Target businesses, typically with revenue of $25 million to $100 million-plus, will have traction in large, growing end-markets. The fund will invest $50 million-$200 million per deal, most often taking control stakes or minority stakes with board seats.

The fund has made four investments. The most recent, announced by Bain in August, is Hey, a payments and e-commerce platform operating in Japan. The deal is the fund’s first in the fintech space, PE Hub reported, and included Hey’s purchase of online reservation system Coubic.

Abrahamson told Buyouts he expected covid-19 to contribute to a quieter deal landscape in the short-term and lower valuations in the long-term. Coming out of the downturn, he said Bain expects to see “some truly high-quality tech companies emerge, rather than just companies that are growing with the rest of the market.”

Some 232 limited partners have so far signed up to the fund, the Form Ds show. Disclosed LPs include New Mexico State Investment Council, which is committing $50 million.