Sources have revealed that long-standing private equity firm Bain Capital is trying to raise $1 billion to launch a new technology fund that the firm will use for buyouts and late-stage minority investments.
The anonymous sources told CNBC that the fund — called Bain Capital Tech Opportunities — will focus on $50 million to $200 million equity investments, specifically in enterprise software and cybersecurity. There are also plans to invest in financial technology, health technology and digital media in the future. In addition, the fund will look to acquire smaller companies.
A Bain spokesperson declined to comment on the report.
The 35-year-old private equity firm — which has been responsible for the takeovers of companies, including Varsity Brands and Toys R Us — now sees room in the software market, which has historically had access to less capital at its disposal. With that in mind, Bain is interested in companies with an annual recurring revenue of $30 million to $100 million, as well as valuations of less than $500 million.
Bain will use the new fund for the number of investment opportunities it has found that are too small for its private equity funds, and don't work as investments for Bain Capital Ventures, which is focused on Seed and earlier-stage investing. As for the venture side, Bain has decided to bypass the tech startups that are reaping the rewards of major funding from SoftBank Vision Fund, hedge funds, mutual fund companies and multibillion-dollar growth funds, and will instead go after companies that have faced some difficulties and are in need of operational improvements.
The sources added that the new fund will be co-managed by Private Equity Managing Director Darren Abrahamson and Public Equity Managing Director Dewey Awad. The company will also take on about 15 employees internally and externally.