PROVIDENCE, R.I. – With the high yield debt market tucked in for hibernation and the IPO window virtually nailed shut, the question of who plans to fill the financing gap for the increasingly-needy communications sector is beginning to come to a head.
Enter Providence Equity Partners, a Rhode Island-based private equity firm known for backing such communications heavyweights as Western Wireless Corp. and Carrier1 International SA. The investment outfit held a $2.8 billion final close on its fourth general fund after less than three months of fund raising.
Like most previous Providence vehicles, Fund IV will be dedicated to buyout, recapitalization and venture capital investments in communications and media companies. The firm’s $950 million Fund III was raised in 1998 and is approximately 92% invested, with the remaining dry powder reserved for follow-on investments. That vehicle was eventually accompanied by a $276 million growth capital offering sold to existing Fund III limited partners.
“I don’t think I’d invest in another growth equity fund from [Providence] if it was offered again this time around,” said an existing Providence limited partner. “That firm is very good when it comes to the really large deals, but they should really focus on that and leave the smaller stuff to the firms who specialize in it.”
Julie Fisher, vice president with Providence, declined to comment on the possibility of a Fund IV companion.
Back On Board
Despite some investor grumbling that $2.8 billion may be more capital than can be put to work in today’s private equity environment, all but two of Providence’s Fund III LPs re-upped on Fund IV. The only two drop-outs – believed to be GTE Investment Management Co. and Allstate Private Equity – no longer exist as independent entities.
Participating investors include BancBoston Capital, Bank of America Capital Investors, Equitable Life Insurance, First Chicago Investment Corp., Harvard Management Co., Los Angeles County Employees’ Retirement Association, Los Angeles Fire and Police Pension System, Massachusetts Pension Reserves Investment Trust, Ontario Teachers’ Pension Plan, Oregon State Treasury, Public Service Electric & Gas Co., Rhode Island Employees’ Retirement System, Rhode Island State Treasury, TD Capital, TIAA-CREF and United Technologies Corp.
So far, the fund has already made one investment. Other deals are expected to follow shortly, although Fisher cautioned that Providence designed its fund with up to a five-year investment cycle in mind.