Vista Equity Partners has passed the halfway mark for its latest flagship fund, documents prepared for a US pension show.
The software specialist, based in Austin, Texas, has raised $11 billion for Vista Equity Partners VIII, according to a due diligence report by the chief investment officer of Connecticut Retirement Plans and Trust Funds, prepared for the pension’s 16 November investment advisory council meeting.
Fund VIII launched early this year with a $20 billion target and hard-cap, according to PEI data.
A final close is expected by October 2023, the CIO’s document noted. However, a document prepared for the same CRPTF meeting by consultant Hamilton Lane about Fund VIII notes that the fund has potential to hold its final close in the second half of this year.
A source familiar with the fundraise told PEI that the final close is anticipated for the second half of next year.
A spokesperson for Vista declined to comment on fundraising.
Investor commitments include $250 million from Oregon State Treasury and $150 million from Teachers’ Retirement System of the State of Illinois, PEI data shows.
If Fund VIII reaches its target, it will be $3 billion larger than its predecessor, the 2018-vintage, $17 billion Vista Equity Partners VII.
Vista is making a GP commitment of 10 percent or $2 billion to Fund VIII, CRPTF documents show.
Fund VIII has a dual-class management fee and carried interest structure. Class A will have a 1 percent management fee on aggregate commitments, which will step down to 1 percent of net contributed capital during the post-investment period. Class B has a 1.5 percent management fee of total commitments, stepping down to 1.5 percent of net contributed capital during the post-investment period.
The fund has a 10 percent hurdle rate and 30 percent carried interest for Class A, and 8 percent and 20 percent respectively for Class B. It has a 10-year term with two possible one-year extensions.
Capital raised for the vehicle will be used to make 18 to 25 control investments in large and upper mid-market enterprise software and technology companies primarily in North America. Transactions will include buyouts, take-privates, recapitalizations, PIPEs and carve-outs, according to investor documents. The average initial equity cheque is approximately $750 million, which represents a step up from the prior fund, documents noted.
According to the Hamilton Lane documents, Vista’s founder, Robert Smith, “has gradually decreased his involvement and is no longer making investment decisions,” although other materials in the document note that he is both an “investment committee member and participates across all Vista Private Equity Funds.”
The source familiar with the firm noted that Smith is “100 percent involved in investment decisions” and sits on the investment committee.
Hamilton Lane is proposing a $200 million commitment to the vehicle.
Fund VIII is the third-largest private equity fund in market – tied with Clayton, Dubilier & Rice Fund XII, which also has a $20 billion target – according to PEI’s Q3 2022 Fundraising Report.
There are some 3,566 funds on the fundraising trail seeking some $1.1 trillion between them in what is expected to be a challenging capital-raising market due to the denominator effect and macro headwinds such as rising interest rates and high inflation globally.