Former Texas Pacific Partner Brings Tech Know-How to LBO Venture

Stepping into relatively new territory, David Stanton -- with I-banking pioneer Sandy Robertson -- plans to raise more than $1 billion.
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Texas Pacific Group

technology-expert David Stanton and San Francisco investment banking pioneer Sandy Robertson are teaming up to form the latest entry in the tech-focused private-equity field by forming an investment fund that likely will aim to raise more than $1 billion.

Private equity has become all the rage in tech circles as professional investors for the first time seek to place huge, leveraged bets on technology companies. Leveraged buyout firms once eschewed tech for its lack of predictable cash flows. As the industry has matured and grown, however, the nontech world's big-money players increasingly are looking to technology for their next deals.

Texas Pacific, which currently is investing a $2.5-billion fund (the latest deal of which is the takeover of Vespa maker

Piaggio

in Italy), has been one of the earliest participants in the tech field. Its investments have included modem maker

Paradyne Networks

(PDYN)

and

GlobeSpan

(GSPN)

, a maker of chip sets for advanced telephone lines. Both companies recently went public at valuations many times what Texas Pacific paid for them.

Among the prominent Silicon Valley players to raise big bucks -- but yet to invest a dime -- are

Silver Lake Partners

and

Thomas Weisel Partners

. Silver Lake, headed by venture-capital and public-company investor Roger McNamee and three partners, has raised about $2 billion. A fund associated with investment bank Thomas Weisel Partners is raising a $1-billion fund focused on late-stage private equity.

What Stanton's and Robertson's as-yet-unnamed and as-yet-unformed fund has that the others don't is actual experience in tech-oriented leveraged buyouts. A Texas Pacific partner since 1994, Stanton led investments in Paradyne and GlobeSpan, as well as in microcontroller maker

Zilog

and telecommunications products maker

GT Com

. Earlier this month, Texas Pacific paid $1.6 billion for a

Motorola

(MOT)

chip unit,

On Semiconductor

. Stanton, 36, sits on the board of each company and intends to continue his affiliation at least through the end of the year.

Stanton and a spokesman for Texas Pacific bent over backwards Thursday to stress their amicable parting of ways. After all, Texas Pacific founders David Bonderman and James Coulter scratched an itch for independence in 1993 when they formed their own buyout group after breaking with the famed Texas investment group associated with Robert Bass.

Any investments Stanton makes on his own for the rest of the year will be in a 50-50 partnership with Texas Pacific. Then beginning next year Stanton and Robertson plan to offer Texas Pacific a right of first refusal to invest up to a certain percentage in each deal.

The reason for the slow ramp-up of the Stanton-Robertson partnership is at Robertson's end. The terms of his separation from the former

Robertson Stephens

(now

Banc Boston Robertson Stephens

) bar him from competing against his old firm until the end of this year.

Before joining Texas Pacific in 1994, Stanton was a venture capitalist with

Trinity Ventures

in Menlo Park, Calif. He prepped for the job of mover and shaker by studying chemical engineering at

Stanford University

, where he later picked up an MBA. He's cagey about the amount of money he and Robertson intend to raise next year, but suggests that it's not a bad assumption that they could collect an amount similar to Silver Lake.

"With all humility, I have a track record that could support such a level of fund raising," he says.

Since leaving his firm, Robertson has invested in -- but because of the noncompete agreement, not taken an active role managing --

E*Offering

, the Newport Beach online investment bank in which

E*Trade

(EGRP)

is an investor. He and Stanton began kicking around the idea of a tech LBO fund about a month ago.

"It was an ignored area before," says Robertson. "Technology is now the largest industry in the country. How can you ignore the largest industry?"

Stanton says he is in the process of recruiting a third senior-level partner to the new firm and eventually could add as many as five senior partners. The firm will have another three to five lower-level partners with specific areas of expertise, as well as five to 10 additional junior-level employees.

While Texas Pacific and Stanton are putting on a happy face over their parting, Texas Pacific can't be overly pleased to be losing its technology ace. Founder Coulter is no stranger to technology, and Texas Pacific also recently hired Robert Packard, formerly a senior investment banker with what's now

Deutsche Banc Alex. Brown

in San Francisco.

Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at

alashinsky@thestreet.com.