Vista Equity launches $2.5bn fundraise

The firm, with offices in Austin, Texas; San Francisco and Chicago, is expected to hit its target with relative ease, according to existing LPs who point to the firm’s strong track record.

Vista Equity wants to raise $2.5 billion for its next fund for investments in software-related companies, according to LPs who have talked to the firm about the new offering.

Vista recently launched Fund IV, which is targeting nearly twice the $1.3 billion the firm raised for its prior fund in 2007.

Limited partners in Vista’s prior funds expect the firm to hit its target relatively easily and cite the firm’s track record of strong performance.

“They’ve done a phenomenal job,” said one existing LP who expects to get into Fund IV. “They’re coming back to market and they won’t have any problem raising money. I have other [institutions] calling me asking about them.”

Vista Equity declined to comment. The firm was founded in 2000 by former Goldman Sachs executive Robert Smith. Vista’s first fund raised about $1 billion from one LP, a businessman that had a relationship with the firm. The second fund, which is called Fund III, was the firm’s first institutional fund.

The firm 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.

For Fund IV, the firm has also implemented some “LP-friendly” terms, including reduced management fees, sources said. The amount of the reduction could not be determined by press time.

Vista specifically targets software investments and, according to LPs, uses a system of “best practices” in its portfolio companies. The system, which is codified and taught across the portfolio, has helped with the firm’s consistent returns, one source said.

Vista recently partially exited its investment in Sunquest Information Systems to Huntsman Gay Capital Partners, Credit Suisse and Neuberger Berman. The sale generated a 3.5x return for Vista. The firm, which still owns about 47 percent of the company, originally invested about $200 million of equity in Sunquest.