While direct lending to private equity funds is taking off to help finance leveraged buyouts, Francisco Partners’ newest $2.2 billion fund will largely play in a different lane. We talk to head of credit and structured solutions Scott Eisenberg about the fund’s sweet spot as interest in technology lending booms.
“If you step back, the areas we really care about are growth, transition, and liquidity,” Eisenberg says. “Those are really big areas, so our market is huge. It’s competitive but we like using our platform to go after those use cases. We don’t have to look for buyouts to compete.”
The firm plans to offer structured solutions for companies that are flexible and scalable, differentiating Francisco Partners from lenders with more standardized offerings. Francisco Credit Partners II will invest in senior secured debt.
The fund will capitalize on its reputation and connections in the technology space as a specialist fund. “We’re known in the industry for our expertise, domain knowledge, for who we are,” Eisenberg says, creating an appeal for those in search of capital who “want to bring that in-house.”
Francisco Credit Partners II clocks in at nearly twice its $1.25 billion target as the latest sign of investor interest in debt. Vista Credit Partners took in $2.3 billion for its third fund, announced earlier this month, while H.I.G. Capital and Ares Management among many others have also raised credit funds this year.
Lending poses an alternative to an M&A market expected to lead league tables into next year. Private equity deal pipelines appear to be especially robust in the technology sector, with nearly a third of PE respondents in Morrison & Foerster survey of 300 global M&A professionals reporting plans to ink four or more deals in the space in 2022.