LPs jostle for position in oversubscribed Vista fund

  • Fund V heavily oversubscribed
  • Louisiana Teachers’ opts out of commitment
  • El Paso commitment “trimmed back”

Strong demand from other investors may force Kentucky to reduce its Vista Equity Partners Fund V commitment to a size that would not be appropriate for its long-term investment strategy, David Peden, the agency’s interim chief investment officer, told Buyouts.

Other limited partners have encountered similar issues with Vista’s fifth fund. In the minutes to its July 16 meeting, the El Paso Firemen & Policemen’s Pension Fund indicated that an $8 million commitment to Fund V that was approved at its May meeting had been “trimmed back” because the vehicle was heavily oversubscribed. The Teachers’ Retirement System of Louisiana also has opted out of an approved commitment of up to $75 million following negotiations with the firm, Maurice Coleman, its director of private markets, told Buyouts.

Vista has ridden a wave of strong demand for Fund V after assembling a “stellar track record” over the course of its 14-year history, according to a March memo from the New Jersey Division of Investment. The firm held a first close on $3.8 billion in April and was said to be well on its way toward its $5.75 billion hard cap, sister website peHUB reported.

Vista invests in enterprise software and technology businesses. The firm had netted a 1.8x multiple on invested capital and a 29 percent net internal rate of return since inception, according to the New Jersey memo. Its third fund, a 2007 vintage pool that raised $1.3 billion, was generating a 2.57x multiple with a 33.3 percent IRR as of March 31, according to Oregon Public Employees Retirement Fund documents.

The firm closed Fund IV on $3.5 billion in 2012, beating its original target by $1 billion. That fund has generated a 1.1x multiple as of March 31, according to Oregon documents. Internal rate of return data was unavailable.

While Kentucky, Louisiana Teachers’ and El Paso have been left to jostle for position under the fund’s $5.75 billion hard cap, other LPs have managed to finalize commitments on the amounts that their boards approved.

The New Mexico State Investment Council has finalized a $100 million commitment that was approved at its March board meeting, spokesman Charles Wollman told Buyouts. The Illinois Teachers Retirement System and Kansas Public Employees Retirement System have finalized their approved commitments of $200 million and $75 million as well, according to representatives.

Vista did not respond to requests for comment.

Vista was founded in 2000 by Robert Smith, the former co-head of enterprise software and storage in the Goldman Sachs investment banking division. The firm had roughly $5.8 billion of assets under management as of Dec. 31, according to New Jersey. Vista maintains offices in Austin, Texas, Chicago and San Francisco.