Demand prompts allocation cuts in Thoma Bravo Discover

Limited partners in Thoma Bravo’s debut lower middle market fund saw their preferred allocations slashed to varying degrees, with some investors receiving only a third of what they’d authorized for the oversubscribed vehicle.

The Arkansas Teacher Retirement System approved a commitment of up to $30 million to Thoma Bravo’s Discover Fund in December. The $14 billion retirement system ultimately secured a $10 million allocation “due to high demand”, according to a recent board meeting summary.

The San Francisco Employees’ Retirement System received a $35 million allocation after committing up to $50 million to Thoma Bravo Discover Fund. Thoma Bravo shaved $2 million off New York State Teachers’ Retirement System’s preferred $60 million allocation.

Thoma Bravo declined to comment on its fund allocation process.

Despite being its first dedicated lower middle-market fund, Thoma Bravo encountered very strong demand for the Discover Fund. The firm held a final close on $1.074 billion in February after roughly six months. The fund was only marketed to existing investors.   

Thoma Bravo will invest the Discover Fund in lower middle market software companies. The fund acquired its first portfolio company, data analysis business Infogix, Inc, in January.   

Thoma Bravo is in the process of raising its 12th flagship fund with a $7 billion target, roughly double the size of its predecessor. Like the Discover Fund, Fund XII so far has attracted pledged commitments from many of the firm’s existing LPs, including Arkansas Teacher Retirement System, Massachusetts Pension Reserves Investment Management Board, New York State Teachers’ and San Francisco.

Thoma Bravo is led by managing partners Seth Boro, Orlando Bravo, Scott Crabill, Lee Mitchell, Holden Spaht and Carl Thoma. The firm has offices in San Francisco and Chicago.

Action Item: To learn more about Thoma Bravo, visit: www.thomabravo.com

Photo: A jar overflowing with Chinese banknotes is pictured during the National Day holiday at Porcelain House in Tianjin, China, October 3, 2015. REUTERS/Kim Kyung-Hoon