Vista races above Fund VI hard-cap for a $10.5bn close

The firm, led by Robert Smith, gave LPs the option of a lower management fee and higher hurdle rate in exchange for 30% carry.

Software and tech-focused firm Vista Equity Partners has held a close on its sixth buyout fund above its hard-cap after over a year of fundraising.

Vista Equity Partners VI has raised $10.5 billion, according to three filings with the Securities and Exchange Commission from 10 March. The filings indicate there were 136 individual commitments in the main vehicle, and 103 in the two parallel vehicles, and the first commitment was received on 11 March 2016.

The fund launched in February 2016 with an $8 billion target and a $10 billion hard-cap, as previously reported by Private Equity International.

It wasn’t clear whether the closing was final. A Vista spokesman was not available to comment.

Fund VI held a first close on $8.9 billion in August and will have an investment pace of $1.5 billion to $2 billion per year, according to a document presented to the Connecticut state treasury in October. At $10.5 billion it is nearly double the size of its predecessor, Vista Equity Partners V, that closed on $5.78 billion in 2014.

Fund VI follows Vista’s strategy of targeting mid- and large-cap companies with valuations of between $400 million and $5 billion in the enterprise software sector, mainly in North America and Europe. The fund will invest $200 million to $1 billion of equity per transaction. But, unlike Fund V, which had a strategy of investing in eight to 10 companies, Fund VI will target 12 to 18 companies.

The Connecticut LP document also outlines the structure and terms of VEPF VI, which offers two classes for LPs. Terms for Class A LPs include a 30 percent carried interest, 10 percent hurdle rate, and 1 percent management fee, which falls to zero after the initial 10-year fund life expires, regardless of any fund extensions, according to the file. Terms for Class B LPs include a 20 percent carried interest, 8 percent preferred return, and 1.5 percent management fee that will remain throughout the whole fund lifecycle, including any extensions, it said.

A separate LP document created by advisor Pension Consulting Alliance for the Los Angeles Water and Power Employees Retirement Plan (WPERP) for the pension’s 8 March meeting showed that Fund VI had made four investments as of 30 September in marketing automation software company Marketo, insurance technology provider Vertafore, digital security platform Ping Identity and information technology management tool provider Infoblox. The investments in Marketo and Infoblox were take-private transactions.

Aside from Connecticut state treasury and WPERP, LPs in the fund include the Canada Pension Plan Investment Board, Illinois Municipal Retirement Fund, Los Angeles Fire & Police Pension System and Oregon State Treasury. 

The SEC filings listed Deutsche Bank as the placement agent for the fund.

According to PCA’s second quarter 2016 report generated for WPERP, Fund V was generating a net internal rate of return of 8.7 percent as of 30 June.

Earlier this month, Vista founder Robert Smith was named PEI’s Private Equity Game Changer of the Year awards for the firm’s rapid growth and strong track record, as part of the publication’s annual awards.