PALO ALTO, Calif. – Trident Capital plans to hold a final close later this month on Trident Capital Fund V, said Donald Dixon, a managing director at the firm.
Trident started raising the $500 million to $750 million-targeted fund in late summer, and as of Jan. 1, the firm had raised $650 million.
Fund V will focus on Internet infrastructure, business-to-business services and the wireless Internet. In order to facilitate wireless Internet investments, Trident entered into a joint venture with the Finnish National Fund for Research and Development (Sitra), which is also a limited partner in Fund V.
Dixon said Sitra found Trident through Trident Managing Director Rockwell Schnabel, who is the former ambassador to Finland under President Reagan.
Dixon said wireless technologies in Finland and Sweden have advanced rapidly because of the influence of Nokia Corp. and Ericsson and the developed wireless Internet market in Europe. Sitra was looking for an American firm to help its Scandinavian portfolio companies bring their technology to the U.S., and Trident was looking for an introduction to Scandinavian entrepreneurs.
“Whenever there is a platform change, it takes a while to figure out how to make money,” Dixon said. He thinks Sitra could improve Trident’s access to the talent that can turn a profit from wireless technologies. Dixon said he expected no more than 10% of the fund’s capital to be invested internationally.
Dixon said Trident has invested across all stages, depending on the state of the market. Fund I was a late-stage and leveraged-buyout vehicle, but the recent Funds III and IV have focused on early-stage investments. He said investment sizes have ranged from $250,000 to $20 million.
Fund V’s preliminary investments include six early-stage companies, but Dixon said that could change. He expected a couple LBOs in the fund and mused that private investments in public companies might come back in vogue.
The fund has already invested in Finland-based Add2Phone Ltd., strategy consulting firm Strategis Information Systems Inc., Stockholm-based Mgage Systems AB, Stockholm-based Mobyson AB, Boston-based Thinking Investments and repeat-entrepreneur-lead Qualys Inc.
Although some firms have all but ceased their new investments, Trident is going forward. Dixon said the firm invested in Qualsys just before the winter holidays.
“We’re still investing, but I think the hurdles are higher,” he said. “I think it’s a great environment to be an investor.”
He expected a three-to-five-year investment window which is longer than recent vehicles. Trident has 10 investing partners with offices in Palo Alto, Los Angeles, Chicago and Westport, Conn. Dixon said the investment professionals in the firm tend to specialize by technology rather than investment stage.
Dixon said Trident’s most recent vehicle, the $350 million Trident Capital Fund IV, has been fully allocated but has plenty of capital available for follow-on investing.
On Fund V, Dixon declined to comment on the management fee and carried interest structure but said the fees would reflect what he called “top-tier returns.” He said the professionals in the firm have invested $50 million across all the firm’s funds.
The lead LPs on the fund are investing subsidiaries of Dutch-based NIB Capital NV and General Motors Corp. Other LPs include Liberty Mutual Group, Northrop Grumman Corp., clients of Abbott Capital Management, Thomas Weisel Partners, Massachusetts Pension Reserves Investment Management Board, an endowment representing Princeton University, and various individuals.