Last week, peHUB reported that Thoma Bravo was targeting $950 million with its tenth fund. Now we’re hearing that the PE firm has received so much interest for fund X that it will likely come in at $1.2 billion, a source says.
Thoma Bravo, which has offices in San Francisco and Chicago, began marketing for fund X right after Labor Day, the person says. A first close is expected in December when Thoma Bravo will likely have commitments of over 50% of the $1.2 billion. A final close is seen in first quarter, the source says.
Thoma Bravo is not using a placement agent.
Marketing for fund X is much different than Thoma Bravo’s last fundraising effort. The PE firm spent 12 months marketing for its ninth fund, which initially had a $1 billion target. Thoma Bravo ended up reducing that target to $822.5 billion, which closed in 2009.
Fund IX was Thoma Bravo’s first pool after partners Bryan Cressey and Peter Ehrich split to form their own firm in late 2007. Cressey & Co., of Chicago, is a middle market firm that invests in healthcare companies. Cressey typically invests from $10 million to $100 million equity per deal, according to the firm’s web site. In contrast, Thoma Bravo targets software and services firms. Investments range from $50 million to $150 million equity per deal.
“People took a risk to back [Thoma Bravo] and it really worked,” the source says. Fund IX is believed to have produced a net IRR of about 50% for LPs, the person says.
It also helps that Thoma Bravo has scored several liquidity events. In 2011, the PE firm sold Flexera Software, Excelligence and Manatron. Also, peHUB estimates that Thoma Bravo has received about $250 million in dividend recaps from portfolio companies including Hyland Software, Entrust and Vision Solutions since December 2010.
Officials for Thoma Bravo declined comment.