Montréal-based Novacap has closed nearly $3.8 billion USD ($5.2 billion CAD) for its seventh tech-focused private equity fund that will continue the firm’s strategy of buying majority stakes in profitable companies.
The new fund thesis “reflects continuity rather than change.”
The fund, which exceeded its target of $2.75 billion USD and was raised in under a year, will maintain the same investment approach as Novacap’s previous tech fund, according to a spokesperson for the private equity firm.
The spokesperson wrote in an email to BetaKit that the new fund thesis “reflects continuity rather than change,” and maintains its “disciplined, cycle-tested strategy” of technology buyouts, where it takes a majority stake in a company with an average cheque size of $300 million USD. Novacap plans to complete approximately three platform investments per year over four years.
Novacap’s previous TMT VI fund, which stands for technology, media, and telecommunications, made its final investment in December, with the $1.9 billion-USD take-private of New York City-based media tech company Integral Ad Science. The company has taken majority stakes in Canadian tech companies Eddyfi (which recently exited to US welding tech company ESAB) and Nuvei.
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Novacap CEO Pascal Tremblay told The Globe and Mail that the dual forces of lower software company valuations, prompted by fears of AI disruption, and a rising interest in defence, come at a good time for the fund. He said that new investors contributed roughly 40 percent of the new fund’s value, and that about one-third came from US investors.
Tech is just one of four buyout strategies within Novacap’s family of funds, alongside industries, digital infrastructure, and financial services. Founded in 1981, the firm now manages $12 billion USD in assets and has invested in more than 250 companies. It last closed a fund in January of last year, a $1-billion USD digital infrastructure fund that seeks to invest up to $100 million into 10 regional companies that sell connectivity and data access services backed by physical assets.
Feature image courtesy Novacap.