New Delhi, June 30 -- Recognize, a private equity firm that backs businesses in the digital services industry, has raised $1.7 billion for its second fund and marked its final close, a top executive told VCCircle.
The second fund, Recognize II, was closed in less than five months after being oversubscribed, said Muthu Kumaran, operating partner and head of India operations.
The fund received 'strong support from existing investors, including a significant commitment from its general partners, and a curated group of new investors', Recognize said in a statement.
Its limited partners include global institutions such as endowments, foundations, pensions, insurers, family offices, chief investment officers and fund-of-funds across the US, Europe, Asia, and Latin America.
"The core investment thesis is intact, which is a focus on next generation digital services, but as progress, fund 2 will have sharper focus and deeper conviction," said Kumaran.
"Our differentiated model of not just being an investor, but also an investor and an operator, with the sector specialized focus, doing only tech and tech-enabled services continues to attract interest from our investors. We have a value creation playbook that we have developed during our journey in fund one and we will continue to double down on it," he added.
Recognize was set up by managing partners Francisco D'Souza, Charles Phillips, and David Wasserman in 2020. It closed its first fund with nearly $1.3 billion in commitments in 2022. The debut fund invested in about 13 companies.
In India, it has backed companies such as information technology service provider Blue Mantis, digital advertising company MediaMint, insurance services company Tranzact, transformation solutions provider AST Global. Its other investments include pure-play services organisation SpringML, digital engineering firm Ciklumvirtual, talent platform for software engineers Torc, and data analytics provider Blend360.
"We believe that the future is going to be some form of proprietary, IP enabled AI, with some amount of platform and automation," he said. "We'll be much more deeper in how we think about AI and IP enabled services, since generative AI is certainly impacting the landscape (in this fund)."
The PE firm is focused on buying a controlling stake in companies with enterprise values between $50 million and $500 million in the technology services space. The second fund would have similar cheque sizes and make a few more investments than the first fund.
So far, the PE firm has already clocked three exits and partial exit from the first fund. Earlier this year, IBM agreed to buy Applications Software Technology (AST), an Oracle consultancy in January. In March, Insight Partners backed 2x, which offers subscription-based marketing as a service, providing a partial exit to Recognize. In 2024, Recognize sold Torc, an AI-powered talent platform, to a subsidiary of Randstad.
Recognize was advised on the fundraise by Rede Partners Americas LLC, with Goodwin Procter LLP serving as legal and tax counsel.
Published by HT Digital Content Services with permission from VC Circle.