Charlesbank Capital Partners is seeking to raise $1.1 billion for a second round of acquisition offers targeting technology opportunities in the lower mid-market.
The goals of the Charlesbank Technology Opportunity Fund II were disclosed in Quincy City Retirement System documents.
Charlesbank may already have exceeded its target: Fund II’s main vehicle and sidecar pool had just over $1.1 billion secured as of December 2023, according to Form D filings.
It’s unclear whether Boston’s managers plan to continue the fundraising drive. The team declined to comment.
Mid-market buyout firm Charlesbank launched a dedicated technology strategy in 2018 by hiring veteran technology investors Darren Battistoni and Hiren Mancody, who previously ran Pamplona Capital Management’s $1 billion technology, media and telecommunications fund. Prior to that, Battistoni was at Welsh, Carson, Anderson & Stowe and Mancody was at Audax Private Equity.
At the time of the hire, CEO Mike Cho said Charlesbank was looking for “meaningful ways to participate in the target-rich technology sector.”
Recent fund performance
Charlesbank Equity Fund X (2021 vintage): IRR: 13%, TVPI: 1.16x Charlesbank Technology Opportunities Fund I (2019 vintage): IRR: 61.06%, TVPI: 2.26x
Source: Buyout data as of June 30, 2023, citing various public pensions. Subscribers can access it here.
The strategy has since evolved to focus on control-focused investments primarily in lower mid-market technology companies valued at $50M-$300M. Areas of interest include enterprise software, cybersecurity, infrastructure software, cloud computing, financial technology, healthcare IT, internet, tech services, data & analytics and industrial technology.
Target companies are well-managed and have characteristics such as a proven business model, established product-market fit and stable or rapid revenue growth, and are profitable or close to it. Fund II plans to commit between $50 million and $125 million to up to 15 investments, according to city of Quincy documents.
Charlesbank closed its first small-cap tech fund in 2020, raising $700 million. The fund has performed well, generating a net multiple of 2.26 and a net IRR of 61.06% as of June 2023, according to the Texas County and District Retirement System (see box).
This strategy has been reflected in 13 platform investments to date, with the most recent, announced in January, being in Searchlight Cyber, a provider of dark web threat intelligence software. Prior to this investment, Charlesbank last year acquired Maltego, an intelligence software platform used for complex cyber investigations.
The Technology Opportunities team is co-led by managing directors Battistoni and Mankodi, along with managing director Mayur Desai, who joined the company in 2009.
Charlesbank, founded in 1998 by former principals of Harvard Private Capital Group, closed its 10th flagship buyout fund on $3.75 billion in 2021. CEO Choi was featured in the Buyout Off Duty series in March.
