Tenaya Capital Raises A $372M Sixth Fund For Growth Stage Investing

Growth stage investor Tenaya Capital said Tuesday it raised a $372 million sixth fund, its first since spinning out of Lehman Brothers in 2009.

The fund took less than six months to complete and was oversubscribed beyond the $300 million target the Woodside, Calif., firm announced in a filing last July.

The firm now has more than $1 billion under management and can boast of recent IPO exits for Palo Alto Networks, Kayak Software and Infoblox.

Managing Director Tom Banahan said 75% of the firm’s existing LPs signed up for the new fund, including many corporate and public pension funds. The strong liquidity generated by Tenaya’s fourth and fifth funds helped retain investors, he said.

Tenaya Capital V-P, a 2007 fund, had generated an IRR of 20.36% as of September 2011, according to a public portfolio report from Pennsylvania’s Public School Employees’ Retirement System. The firm’s 2003 Tenaya Capital IV-P had an IRR of 8%, the report shows.

The new fund, Tenaya Capital VI, is similar in size to the $365 million fifth fund and the $300 million fourth fund. It will follow the firm’s strategy of investing about 80% of its capital in technology-focused Series B and C deals and most of the remainder in later-stage transactions. Tenaya selectively does some early-stage investing.

The firm’s initial investment target is $5 million to $10 million and its goal is to invest $10 million to $15 million with each company. That should lead the new fund to between 32 and 37 companies over its 3½ year life, Banahan says.

Banahan added that he is upbeat about Series B and C investing. “The deal flow is amazing. The IT world is really right for another big shift.”

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