Providence Equity Partners Closes New $6 Billion Fund, Total Under Management Exceeds $45B
GoLocalProv Business Team
Providence Equity Partners Closes New $6 Billion Fund, Total Under Management Exceeds $45B
Providence Equity Partners, the private-equity firm led by three Brown University grads and located in downtown, exceeded its target for the firm's new $5 billion fund by an additional $1 billion.
Most recently the company is known for investments in Hulu, Learfield Sports, and Ironman, but in the earlier years, it was telco and wireless.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAccording to the Wall Street Journal on the fundraising for this round, "Providence Equity Partners VIII LP, closed on Sept. 5 above its $5 billion target, according to a memo to investors viewed by The Wall Street Journal."
Providence Equity’s previous flagship fund closed with $5 billion in 2013.
The firm itself and its partners committed $350 million to this fund, reported the WSJ.
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Providence Equity is led by Jonathan Nelson, Paul Salem, and Glenn Creamer — all three Brown grads. Nelson is a perennial on the Forbes' list as the most wealthy Rhode Islander -- and is always ranked high on GoLocal's list of Rhode Island's Wealthiest and Most Influential.
Salem is one of the owners of the Pawtucket Red Sox -- soon to be moved to Worcester, MA. Creamer was raised in Pawtucket.
According to the WSJ, "public pension funds that backed the new vehicle include the Washington State Investment Board, the New York State Common Retirement Fund, the Texas Municipal Retirement System and the South Carolina Retirement System Investment Commission, pension documents show."
The closing of the new flagship vehicle comes on the heels of the completion of a fundraising effort by Providence’s growth-investing arm. Providence Strategic Growth Fund IV closed at its $2 billion hard cap, WSJ Pro Private Equity reported earlier this month.
"After a string of top-performing funds in the late 1990s and early 2000s, the firm raised a pair of vehicles before the financial crisis that produced disappointing results. The $12 billion, 2006-vintage Providence Equity Partners VI fund produced an internal rate of return of 5.3% as of the end of last year, while its 2005-vintage fifth fund had an IRR of 3.1%, according to performance data published by the Oregon Investment Council," says the WSJ.
In 2015, the New York Times’ Deal Book article entitled, “The Private Equity Firm That Grew Too Fast” published on Friday reported, “It has been a bumpy few years for Mr. Nelson and Providence (Equity Group). In February, one of the firm’s biggest investments, the security screener Altegrity, filed for bankruptcy in the face of fraud accusations. Providence had its entire $800 million stake wiped out, the largest loss in the firm’s 26-year history.”
The Times story also unveils a candid side of self-reflection by Nelson. He tells the New York Times, “One of our mistakes was definitely style drift…Altegrity was a good example of that.” Style drift is classic investor speak about getting away from one's core competency and where you made your money.
But now the firm seems to have captured the old proverbial management, "Providence’s performance has returned to form in recent years, however, with its seventh flagship fund recording an IRR of 21.3% as of the end of 2018, the Oregon pension document shows."