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Providence Equity Partners Closes New Fund

Providence Equity Partners closed a new $12 billion fund Wednesday, Providence Equity Partners VI -- a move that could give the private-equity giant the flexibility to go after larger deals in the media and communications sector on its own.

One of the largest private-equity firms in the country, Providence manages about $21 billion in total equity commitments. Providence Equity Partners VI is the firm’s sixth fund since its inception in 1990.

The fund is one of the largest specialized funds in the world, and it is almost three times larger than the company’s last fund, Providence Equity Partners V, which raised about $4.25 billion in 2004.

In a press release, Providence said it raised the money through corporate, state and sovereign pension funds, university endowments, private foundations, funds of funds and high-net-worth individuals.

“We are gratified by the strong support of our limited partners, who enabled us to raise this substantial new fund in only four months,” Providence CEO Jonathan Nelson said in a prepared statement. “We remain focused on delivering superior returns to our investors through our distinctive approach to equity investing.”

Just what Providence plans to do with all of that financial firepower remains to be seen. But some members of the cable financial community believe that the fund will enable Providence to go after deals on its own.

While Providence has made several investments as the sole private-equity participant, many of its larger deals have been done as part of consortiums, including its participation in the $4.9 billion acquisition of Metro-Goldwyn-Mayer in 2004 with Sony, Texas Pacific Partners, DLJ Merchant Banking Partners and Comcast.

UBS Securities cable debt and equity analyst Aryeh Bourkoff said that on the cable-systems side, Providence could focus on adding properties to one of its existing investments, Bresnan Broadband Holdings. Providence backed Bresnan in its 2003 purchase of 314,000 subscribers in Montana, Wyoming, Utah and Colorado from Comcast.

“Providence has always been a savvy buyer of cable properties, and it will likely look for opportunities to bolster its current holdings, which are concentrated in the Bresnan assets,” Bourkoff said. “The problem is that there is a scarcity of small systems held for sale.”

Bourkoff added that Providence could also focus on international cable or on content assets.

“I think Providence will be active in all of media and telecommunications. The key question will be how big they’re willing to go for the next transaction,” he said.