The Los Angeles County Employees Retirement System has committed $200 million to Vista Equity Partners’ Fund V, according to documents from the pension’s investment consultant Grosvenor Capital Management.
Vista was unavailable for comment at press time.
Fund V, which has a $3.5 billion target and no official hard-cap, is expected to hold a first close later this month, and could raise up to $5 billion, according to pension documents. Fund V is expected to be oversubscribed.
Fund V will include a general partner commitment of 2 percent or more of total capital commitments, or $70 million. Limited partners will pay a management fee of 1 percent with a preferred return of 10 percent and 30 percent carried interest, or a 1.5 percent management fee with a preferred return of 8 percent and 20 percent carried interest. The fund has a 100 percent fee offset.
Fund V will invest more than $100 million in between 8 and 12 US-focused technology companies with enterprise values of between $200 million and $3 billion. No more than 30 percent of Fund V can be invested outside North America. Vista targets businesses that develop proprietary software solutions, such as auto retailer software Reynolds & Reynolds and grant-making software company MicroEdge, according to the firm’s website.
LPs in Fund V include The Illinois Municipal Fund and The Kansas Public Employees Retirement System, according to Private Equity International’s Research and Analytics division.
Vista’s prior fund, Vista Fund IV closed on $3.5 billion in late 2011 and included a GP-commitment of $167 million, according to LACERA documents. The fund has nine active companies as of 30 September. Fund IV was generating a net internal rate of return of 3.7 percent and a net return multiple of 1.04x as of 30 September, 2013. LACERA previously invested $100 million in Vista Fund IV and $50 million in Vista Fund III, the firm’s first institutional fund.
Fund III, a 2007 vintage, closed on $1.3 billion. Fund III was generating a net IRR of 27.9 percent and a net return multiple of 2.29x as of 30 September, 2013. Vista Fund II raised $1 billion and was generating a net IRR of 29.2 percent and a net return multiple of 2.68x, as of 30 September, 2013.
Vista also manages a buyout fund strategy under the Vista Foundation, which closed its most recent fund, Vista Foundation Fund II, on $1.1 billion, including a $100 million GP commitment, in November 2013. Vista Foundation funds make investments of $100 million or less in lower mid-market software and technology companies. LACERA invested in Vista Foundation Fund II through a separate account managed by Pathway Capital Management.
Vista is also in market with its Vista Credit Opportunities Fund, which is targeting $600 million. The fund held a first close in 2013 on $120 million and has already invested all of its capital in six commitments.
The firm is also considering expanding into public markets and focusing on software. If the firm pursues this strategy, it will hire a separate team.
Vista was founded in 2000 by chairman and chief executive officer Robert Smith and president Brian Sheth, who previously worked together at Goldman Sachs and focused on M&A activity for technology companies. Martin Taylor, who is the president of Vista Consulting Group, an in-house division, is also a senior professional at the firm. All three executives are listed as key persons in the fund documents.
LACERA has committed $550 million to private equity funds so far in 2014. The pension has a 10 percent taget allocation to private equity and a 9 percent actual allocation as of 30 June 2013.