Vista's Smith named PEI's 2016 'Game Changer'

In the one award given at the discretion of PEI's editorial team, Robert Smith, founder of Vista Equity Partners, is named Private Equity Game Changer of the Year.

If technology is once again the sector du jour, then the manager that has to take a large chunk of the credit for that is Austin, Texas-headquartered Vista Equity Partners. On the back of a stellar track record – an average net IRR which market sources put at more than 25 percent across its existing six funds – the firm has helped take private equity investing in technology to a new level and created a proposition that limited partners have found irresistible.

Vista commenced fundraising for its sixth flagship buyout fund early last year and it quickly became apparent that the $10 billion hard-cap would come under some considerable pressure. That pressure has since told, and the hard-cap has reportedly now been raised to $10.5 billion. Assuming the fund closes before the $100 billion giant SoftBank Vision Fund, it will surpass Silver Lake’s $10.3 billion 2013 vehicle to become the largest technology fund raised to date.

Robert Smith founded the firm in 2000. In his previous role at Goldman Sachs he advised the likes of HP, Apple and Microsoft on M&A. He left the bank to found the firm, securing a $1 billion commitment from a family charitable trust. He was joined by Brian Seth, who had worked for Smith at Goldman Sachs before moving to Bain Capital.

The growth of the firm has been rapid. Since it raised Fund IV in 2011 the headcount has gone from 68 to more than 250 professionals. It has added fund lines alongside its flagship buyout funds – a mid-market buyout fund and a credit fund – and is considering adding two more to the mix: a small market fund and a “long life” buyout fund, according to documents prepared by investment consultant StepStone last October, although details on these are scant. All the while the focus remains on the enterprise software, data and technology-enabled solutions sectors.

Smith seems to have built a franchise with lasting value. Indeed, in 2015 Dyal Capital Partners – a specialist investor in private equity firms – bought an 18 percent stake in Vista for approximately $875 million, valuing Vista at about $4.86 billion. His next challenge will be to maintain the firm’s stellar returns with a fund almost double the size of its predecessor.