Thoma Bravo reaps strong returns in exit spree

The Chicago-based firm has sold three companies in the past six weeks, and will come to market with its next fund before the end of the year.

Thoma Bravo has had a busy summer.

The Chicago-based firm has realised two investments from its fully invested eighth fund and exited one company from its ninth fund in the past six weeks.

Earlier this month, Thoma Bravo sold children’s education product distributor Excelligence to Sterling Investment Partners and software licensing company Flexera to the Ontario Teachers’ Pension Plan. Financial terms were not disclosed, but industry sources said the exits generated return multiples of 2.5x and 4.6x, respectively. Excelligence comes from Thoma Bravo’s eighth fund, which has exited nearly half of the companies in its portfolio. Flexera was purchased from the firm’s ninth fund, which is more than 80 percent invested.

In June, Thoma Bravo sold tax software company Manatron to Thomson Reuters, generating a return multiple of more than 3x, according to a source close to the situation.

“In terms of where our money has been going recently, a lot of it has been going into the software space, where we still see some good opportunities,” Thoma Bravo managing partner Lee Mitchell told Private Equity International.

Mitchell, who characterised the current exit environment as a “strong,” added that the timing of the exits, all of which were agreed within roughly six weeks, was “not the result of some grand plan”.

Thoma Bravo is expecting to come to market with its next fund before the end of the year, Mitchell said. The firm’s software-focused ninth fund, which was oversubscribed, hit its $823 million hard-cap in March 2009. The original target for the fund had been $1 billion, but it was adjusted downward in the more challenging fundraising environment.