Vista has clear view of new fund

Vista Equity Partners, a mid-market buyout shop focused exclusively on enterprise software deals, has commitments for more than half of a second fund targeted at $1.1 billion, PE Week has learned.

Vista’s first fund is on track to return “well over three times cash-on-cash,” says Managing Principal Robert Smith, who founded the San Francisco-based firm in 2000.

In terms of realized value, the fund is about one-third of the way through, and “the back two-thirds is better than the front on-third,” Smith told PE Week.

The bulk of Vista’s first fund, a $1 billion vehicle, came from one family. For its second fund, it is going after institutions and has already landed commitments from the likes of AIG, CalPERS, General Motors, Horsley Bridge, Lehman Brothers and New York state, Smith says.

Vista started fund-raising for its second fund in January and is “well over half committed at this point.” Smith expects to hold a final close in “the next couple of months.”

Vista focuses on enterprise application developers. Its sweet spot is a company with an enterprise value of $300 million.

Vista’s website shows 13 companies in its portfolio. Among those that it has not yet exited are Jacksonville, Fla.-based CRAIG/is Ltd., which provides outsourced insurance subrogation services; Kettering, Ohio-based The Reynolds and Reynolds Co., which delivers software solutions and services that support automotive retailing; and Huntsville, Ala.-based Sirsi Corp., which provides software and services for libraries.

Smith says there is no shortage of opportunities since software is a $650 billion industry, but “it’s a heavy lifting business. We go in and change the underlying businesses processes at those companies. Every one of them becomes low-cost producer in the space.”