December 1, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Meet Francisco Partners’ Founder and CEO ‘DJ’ Deb

  • Insider’s Banker of the Week series appears in our weekday newsletter, 10 Things on Wall Street.
  • This week we’re featuring Dipanjan “DJ” Deb, the cofounder and chief executive of Francisco Partners.
  • The private-equity firm just raised about $17 billion in capital through two new funds. The fundraise comes at an opportune time for the tech-focused investor as target company valuations slump.

Dipanjan “DJ” Deb reckons the tech sector is what is going to lead the economy out of this recessionary period. And that is a “huge tailwind,” for his private-equity shop, Francisco Partners, where he is chief executive.

The investment firm just raised close to $17 billion through two new funds, and Deb’s ready to deploy that cash across healthtech, software, cyber security, and fintech, among other tech-adjacent spaces. Francisco Partners raised $13.5 billion through its seventh flagship fund, and $3.3 billion in a fund dubbed Francisco Partners Agility III.

Deep-pocketed investors came into the capital-raising vehicles, including public pension funds like CalPERS and CalSTRS, sovereign wealth funds, and corporate pension funds, Deb said.

“Most tech companies’ stock prices have been decimated, and some of those are very warranted. A lot of investors have thrown the baby out with the bath water and not been discernible,” Deb said in an interview. “Our goal is to figure out those opportunities and what we can go after.”

Company valuations ballooned in recent years as low-cost capital and cashed-up investors piled into young companies, many of which were unprofitable. But as public markets have cratered, and valuations have dipped, Deb is feeling opportunistic.

“Some companies were dramatically overvalued. People were spending at all costs and that led to some improper behavior,” Deb said. “A lot of companies were poorly managed, but among them, there are a lot of gems. Our goal is to find those gems.”

Including this latest fundraise, Francisco Partners is now equipped with $23 billion in available capital. Deb said that money will be put to work on finding public companies to take private, and targeting bloated businesses looking to shed assets through so-called carve outs.

Every large company has “underperforming divisions,” according to Deb. And when it comes to convincing those CEOs to divest an asset, Deb’s pitch is “addition by subtraction.”

“As a CEO where do you spend your time? The speech we make to big companies is, ‘if you divest this division, you can focus on your core competencies and your multiple will go up,'” Deb said.

While the slump in valuations has private equity circling cheaper assets, there are some headwinds.

Interest rate hikes are partially responsible for compressed valuations, and market volatility does make it harder to negotiate an asset sale because certain sellers might be reluctant to let go of a business that just 12 months ago came with a sky-high value.

“When there’s huge volatility in prices, people have a hard time getting to ‘yes,'” Deb said.

Thirty years old, and 13 months without a salary

Deb and co-founder David Stanton formed Francisco Partners in 1999. The pair left investing giant TPG to form their new venture. Deb called it “Project Francisco” after a colleague who lived on Francisco Street in the Bay Area.

Deb, 30 at the time, was taking a huge risk. He had a newborn baby and went 13 months without a salary.

And in the early days — like many new businesses — Deb and Stanton’s venture almost went out of business. But the company got a little help from Sequoia Capital, which invested in the firm early on, Deb said.

Today, like many of the businesses Francisco Partners invests in today, Deb champions the work ethic of a founder.

“We partner with a lot of founder-led companies. That resonates because I’m a founder. My parents thought I was crazy, but that’s the entrepreneurial spirit,” Deb said.

The Banker of the Week series is featured in Insider’s 10 Things on Wall Street — sign up here to get the newsletter each weekday morning.