Australia's tech-focused PE firm Potentia Capital closes second fund at $441m

Andrew Gray, founder and managing director of Potentia Capital

Potentia Capital, a technology-focused private equity firm in Australia and New Zealand, has closed its second fund at A$635 million ($441 million) hard cap, including GP commitment, according to a statement.

The fund, Potentia Capital Fund II, which exceeded its target size of A$500 million, brings Potentia’s total assets under management to over A$1 billion.

Potentia said it has attracted both new and existing institutional investors, including a mix of asset managers, consultants, insurance companies, family offices, foundations, fund of funds and superannuation schemes from the US, Europe, Australia and Asia.

Potentia invests in growth and buyout deals in middle-market technology businesses. With Fund II, the firm said it will focus more on New Zealand-based companies. It also plans to hire an executive in Singapore to scout for Asia-based bolt-on opportunities.

Potentia has completed nine platform investments and eight bolt-on acquisitions to date, it said. The firm’s portfolio companies include mining software provider Micromine, instore terminal integration software and online payment gateway services provider Linkly, and specialist B2B e-commerce technology provider Commerce Vision.

The firm added that it continued to see strong pipeline activity, and expected to close its first platform deal through Fund II in H2 2022.

Meanwhile, it has exited human capital management and payroll software company Ascender at a multiple on capital (MoC) of 16.4x, and compliance software solutions provider CompliSpace at 4.7x MoC.

“We founded Potentia believing that a sector-specific focus on growth and buyout investing in the Australasian market would allow us to form deeper partnerships with management teams, drive faster transformation and ultimately deliver superior returns,” said Andrew Gray, founder and managing director of Potentia.

Before founding Potentia, Gray was a managing director of Sydney-based Archer Capital, where he led the firm’s technology investments along with Tim Reed, who is now Potentia’s chair of the advisory board.

Gray was also formerly a partner at US technology-focused buyout firm Francisco Partners, and co-founder of software firm Abilizer Solutions (which was later sold to Oracle-owned BEA Systems).

Potentia’s first fund was closed at A$382 million in January 2021, which also surpassed an original target of A$300 million.

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