Pensions commit $300m to Vista Equity

Vista Equity Partners wants to nearly double its previous fundraising effort, targeting $2.5bn for a niche software focus.

Two US public pensions have made strong showings of support for Vista Equity Partners' recently launched Fund IV, which is targeting $2.5 billion.

In recent weeks, the firm received a $200 million commitment from New Jersey’s $74 billion pension system, while the Oregon Investment Council agreed to chip in $100 million.

Vista Equity’s fourth fund will invest in mid-market software-related companies with enterprise values between $100 million and $1 billion.

Fund IV will invest in approximately 10 to 12 portfolio companies as a lead investor, according to a memo from Oregon Public Employees’ Retirement Fund. Of those, about eight would be in the $100 million to $250 million range with the remaining investments in the $350 million to $400 million or upwards range.

Vista Equity’s previous fund, which follows a similar investment criteria and strategy, raised $1.3 billion in commitments in 2007. The growth in fund size is expected to translate into larger deals than seen in Vista’s earlier funds, a memorandum from Oregon.

The firm’s successful track record played a contributing role in New Jersey’s decision to commit $200 million. Vista is New Jersey’s best performing private equity manager, generating an internal rate of return of just under 50 percent and an overall cash-on-cash return multiple of 3.8x. Furthermore, an investment of that size comes with a discount on the management fee, pension investment staff said in board documents.

Former Goldman Sachs executive Robert Smith founded Vista Equity in 2000. Its previous Fund, called Fund III, was its first institutional fund.