Vista to return Fund III in exit

San Francisco-based Vista Equity Partners has agreed to sell its remaining stake in Sunquest Information Systems, which will pay Fund III LPs back all contributed capital. The fund has six remaining portfolio companies.

Vista Equity Partners is on track to return all contributed capital in its third fund to limited partners through the exit of one portfolio company – Sunquest Information Systems.

Fund III raised $1.3 billion in 2007 and is almost fully invested; the fund has six portfolio companies left.

Vista announced this week that it had agreed to the sale of its remaining stake in healthcare software provider Sunquest Information Systems to Roper Industries, which makes engineered products for a variety of industries, including medical, water and education. Vista had sold part of its stake last year to Huntsman Gay Capital Partners, Credit Suisse and Neuberger Berman, generating a 3.5x cash-on-cash return.

The sale of Vista’s remaining stake in Sunquest to Roper would represent a 5x cash-on-cash return and roughly a 60 percent internal rate of return over the life of the investment, which was made in 2007, according to a person with knowledge of the deal. Revenue over the life of the deal increased more than 25 percent and earnings before interest, taxation, depreciation and amortisation quadrupled, the person said.

Vista could not be reached for comment.

Since inception, all Vista funds have realised returns of more than 4x cash-on-cash and just under 50 percent gross IRR, the person said.

LPs in Fund III will be pleased with the Sunquest exit. Fund III was generating a 27.7 percent internal rate of return and a 2x investment multiple as of 30 September 2011, according to information from the California Public Employees’ Retirement System, an LP in the fund.

Investors flocked into Vista’s fourth fund, which closed earlier this year on $3.5 billion, just above its hard-cap, based on the firm’s solid track record and some LP-friendly terms on Fund IV, several LPs told Private Equity International in prior interviews.