Vista buys into healthcare software business

The San Francisco-based firm has jumped on the healthcare bandwagon with its $320m acquisition of Sage’s healthcare services division.

Vista Equity Partners has purchased the healthcare arm of UK-based software company Sage for $320 million. The sale is expected to be completed by November, the company said in a statement.

The San Francisco-based firm spent more than average on the deal. Vista, which focuses on the software and technology sectors, typically invests between $20 million to $200 million per transaction.

The firm did not respond to requests for comment.

Sage Healthcare stores patient information and medical records electronically for later analysis and retrieval, according to its website. The healthcare business’s half year revenue at 31 March 2011 was £72m with an EBITA of £10m, according to a statement from the company.

Healthcare has been an active sector for private equity recently. This week, two former executives from The Carlyle Group launched NaviMed Capital, which will specialise in late stage venture capital and growth equity investments in the healthcare sector. Earlier this month, Veronis Suhler Stevenson sold healthcare services company Avatar International to The Riverside Company, generating a more than 4x return multiple, VSS said in a statement.

Vista is currently in the process of raising its fourth fund, which is targeting $2.5 billion and is expected to close by year’s end. Since its March launch, Fund IV has been a hot ticket for LPs, many of whom may be drawn to its attractive fee schedule. Vista lowered management fees in the fund to 1.5 percent during the investment period and 1.5 percent per annum of LP capital contributions for investments still in the portfolio, according to information from the New Jersey Division of Investment, which committed to the fund. Management fees are 1.25 percent for commitments of $200 million or more in the first close. Vista also will use 100 percent of any deal fees to offset the management fee.

The fundraising has benefitted from the firm’s track record. According to sources, Vista has generated an overall cash-on-cash return multiple of 3.8x and an internal rate of return of just under 50 percent since inception. Its first institutional fund, called Fund III, raised $1.3 billion in 2007.

Vista was founded 2000 by former Goldman Sachs executive Robert Smith. The firm manages $2.7 billion in committed equity capital, according to its website.