Nov. 23 (Bloomberg) -- Palm Inc. director and former EBay Inc. executive Rajiv Dutta is joining Elevation Partners LP and will help the private equity firm raise money for a second fund, according to a person familiar with the decision.

Dutta, 48, is Elevation’s first new partner since its founding in 2004, said the person, who requested anonymity because Dutta’s move hasn’t been formally announced. The private equity firm already has two directors on Palm’s board.

Elevation, which has invested about 75 percent of its existing $1.9 billion fund, will use the new money to back technology companies that target consumers, an area of expertise for Dutta, the person said. The plans for a new fund follow Norwest Venture Partners’ announcement that it completed a $1.2 billion investment pool this month.

In addition to Palm, maker of the Pre mobile phone, Elevation’s investments have included real estate Web site Move Inc., publisher Forbes Media LLC and SDI Media Group, which provides video translation, dubbing and subtitling services.

Elevation co-founder Fred Anderson, also an EBay director and a former chief financial officer at Apple Inc., worked to recruit Dutta for more than a year, the person said. Dutta ran all three divisions of EBay, the most visited U.S. e-commerce site, including PayPal, Skype and Marketplaces. He also served as EBay’s finance chief during his 10-year career at the company.

Palm Investment

Elevation, based in Menlo Park, California, is best known for its $460 million investment in Palm. That makes it the largest shareholder of the Sunnyvale, California-based company.

Anderson, 65, also helped coax former Apple executive Jon Rubinstein out of retirement to lead Palm. Elevation’s other partners include Silver Lake co-founder Roger McNamee and U2’s Bono. McNamee serves on Palm’s board along with Anderson.

Lynn Fox, a spokeswoman for Palm, said the company hadn’t received notice of Dutta’s plans to join Elevation and declined to comment further. Ron Low, a spokesman for Elevation, declined to comment. Dutta declined to comment.

Palm fell 27 cents to $11.47 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have risen almost fourfold this year.

To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net

Last Updated: November 23, 2009 16:26 EST