Francisco Partners Eyes Tech Opportunities After Closing Second Credit Fund – Business Insider

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Tech-focused investor Francisco Partners has just closed its second credit fund, a $2.2 billion effort dubbed FP Credit Partners II.
The money, raised through the $25 billion private-equity firm’s FP Credit arm, will target healthcare opportunities, fintech, security, and industrial technology companies, among others, Scott Eisenberg, the head of credit and structured solutions for Francisco Partners, told Insider.
Private debt funds sat on more than $361 billion in accumulated funds last month, according to Preqin data, a mountain of cash that needs to be put to work. Private funds like FP Credit Partners II typically deploy cash through direct loans. The loans give investors exposure to a borrower’s debt structure, but do not imply an equity investment.
Eisenberg said the new fund will prioritize lending to information technology companies linked to healthcare, fintech companies (specifically those tied to the payments space), cybersecurity firms, and industrial tech, particularly in areas like manufacturing or supply-chain systems that are deploying new technologies.
“If you’re a private company, and you want to go public in six-to-nine months, we want to support that transition. It’s hard to raise equity that close to an IPO, but we can provide capital in that kind of transition,” Eisenberg said.
In addition to so-called pre-IPO capital, Francisco Partners’ new fund can support debt-fueled M&A, and opportunistic lending opportunities for borrowers with immediate liquidity needs to address upcoming debt payments, Eisenberg said.
The private investor had targeted $1.25 billion for the second credit fund, but existing investors were joined by new partners from the Americas, Europe, and Asia, enabling a near $1 billion increase.
The money is expected to be deployed over roughly three years, Eisenberg said.
Francisco Partners’ first credit fund, a $750 million raise that closed in June 2020, has since been deployed into digital healthcare platform ZocDoc and online ticket provider Eventbrite, among other companies.
Cashed-up private-equity funds can lend billions of dollars through such direct-lending arms. It has not only diversified their exposure to different forms of credit, but has granted them access to companies’ capital structures without needing to buy equity.
Buyout titan KKR’s credit arm can provide senior, secured loans and is also delving into asset-based financing. Rival Blackstone Credit, formerly GSO Capital Partners, is another example of a buyout shop that has used its balance sheet to build a formidable credit arm that competes with Wall Street lenders.
Eisenberg joined Francisco Partners from Blackstone Credit in 2017, enamored by the chance to build a credit business that was focused on tech investments.
“We have the capability as a firm to leverage our intellectual property and get exposure to companies we find impressive, but we can’t always buy the business. Credit capital is a huge opportunity to deploy capital in the tech space,” Eisenberg said.
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