Vistria Group is seeking at least $4 billion for its fifth flagship fund, coming back to the market after closing its last offering in June 2021.
The firm is hitting the fundraising market that has slowed as LPs contend with overexposure to private equity as well as slowing distributions, leaving them with less capital for new commitments.
Vistria has a $4 billion target for its fifth fund, with a $5 billion hard cap, according to documents included in advance of the Connecticut Retirement Plans and Trust Funds Investment Advisory Council meeting scheduled for February 8.
Buyouts reviewed the documents, which included a due diligence report from its investment staff and separate analysis from adviser Hamilton Lane.
According to the documents, Vistria has already received $680 million in commitments for the fifth fund. It expects to close in the second quarter of this year. Connecticut is considering a $175 million commitment to the fifth fund, according to the report. It has also been offered a seat on the fifth fund’s LPAC board.
The fifth fund will focus on mid-market healthcare, education, and financial services companies, according to the documents. Vistria will target companies between $50 million and $500 million that generate EBITDA between $10 million and $100 million.
Hamilton Lane said Vistria expects to invest between $50 million and $500 million per equity check across 15 to 17 portfolio companies for the fifth fund.
Both Connecticut’s investment staff and Hamilton Lane touted Vistria’s past returns, noting that its first and second funds have ranked in the first quartile across a variety of metrics. Neither of those funds have yet to suffer any losses from its investments, according to the documents.
However, the due diligence report lists Vistria’s “significant unrealized portfolio” as a key risk behind a potential investment in the fifth fund.
Vistria holds 31 private portfolio companies across its first four funds, with an unrealized value of $4 billion, according to the due diligence report.
According to that report, Vistria will charge a 2 percent management fee during the investment period, and 1.75 percent on net invested capital. The fund also will have a 20 percent carry and an 8 percent preferred return. Management fees will be offset by 100 percent of any transaction fees, according to the report.
The fund term will last for ten years, with two one-year extensions at the discretion of Vistria, according to the report. The investment period will last five years, with two one-year extensions.
The due diligence report says Connecticut could gain exposure to co-investment opportunities through the fifth fund. According to the report, third part co-investors and management invested more than $5 billion in the third and fourth funds.
HarbourVest made private equity and private credit co-investments in a Vistria sponsored company as part of Connecticut’s co-investment program in 2022, according to the due diligence report.
The $46.1 billion system committed $745 million to Vistria’s third fund and $150 million to its fourth fund. Connecticut also committed $100 million to Vistria’s structured credit fund in 2022.
Headquartered in Chicago, Vistria was founded in 2013 by Martin Nesbitt and Kip Kirkpatrick. Nesbitt previously co-founded TPS Parking Management and worked within Prtizker Realty Group, according to Hamilton Lane. Kirkpatrick was a co-founder of One Equity Partners and Water Street Healthcare Partners.
Vistria did not respond to a request for comment by press time.