Kennet Can, Raises $315 Million Fund

Blaise Zerega says open the IPO window, please.  Kennet Partners today announced a $315 million fund with a growth equity focus, which it hopes will help the firm navigate towards profitable exits even as IPOs show little signs of rebounding.  "I haven't seen it as that big of an obstacle," says Javier Rojas, the firm's Silicon Valley managing director. "Most deals get acquired, but fewer IPOs does reduce the number of companies that are buyers," he admits.

The fund, called Kennet III, attracted capital from Access Capital Partners, Adveq, Alpha Associates, BNP Paribas Private Equity, Capital Dynamics, Crédit Agricole Asset Management Capital Investors, Credit Suisse, European Investment Fund, Finama, LGT Capital Partners and Siemens.

Rojas says that instead of IPO exits, many of the portfolio companies could be sold, but not necessarily to big name technology companies. "Large private equity firms are stepping up to fill that equity role" for entrepreneurs. "In the past, if a company had $50 or $60 million in revenues, they'd do an IPO. Now, it's private equity."

The downside is that for entrepreneurs, and their investors, selling to a private equity firm can mean less capital than the public markets provide. But as Rojas points out, "It's a trade-off between cash liquidity versus stock, which can be a volatile currency."

Kennet has already announced two investments from the new fund. The first, part of a $35 million round in NTRGlobal, a European software-as-a-service company. The second, part of an $11 million financing of TMC (European Telemedicine Clinic), which provides teleradiology services to healthcare providers.

Because it has offices in Silicon Valley and in London, some of Kennet's portfolio consists of European firms with healthy businesses locally, but looking to grow their presence in the U.S. Kennet III is a cross-border fund, which means the carry it generates goes to partners on both sides of the Atlantic. "It's expensive for a firm of our size," Rojas says, "but it's a real advantage, a seamless devotion by our whole team that works on behalf of our entrepreneurs and our investors."