Vista raises cap on third Foundation Fund amid heavy demand

Vista Equity Partners raised the cap on its third Foundation Fund to $2.75 billion, according to a person with knowledge of the firm.

Foundation Fund III, which had been capped at $2.5 billion, is almost done fundraising, the person said. When the fund could hold a final close is unclear. Vista had been holding Fund III open for some last-minute LPs since at least September, Buyouts has reported.

Vista’s Foundation Fund series targets investments in small and lower-middle- market enterprise-software companies. Fund III hit the market earlier this year, though it’s not clear when it officially started fundraising.

The firm closed Foundation Fund II on $1.1 billion in 2013. That fund was producing a 1.05x total value multiple as of May 31, 2016, New Jersey Division of Investment performance information shows.

Generally firms have to get LP or at least limited-partner advisory committee approval to raise the set hard cap. It’s unclear whether that’s the case with the Foundation Fund.

Fund-size increases are one of the issues LPs focus on when they assess a fund to which they plan to commit. According to a recent LP survey by Probitas Partners, 45 percent of respondents said cap on fund size is one of the issues on which they focus in due diligence.

But large increases in size from the prior fund to the new fund generally are not enough of a concern to keep LPs from committing to a strong manager to whom they want exposure. That is the case with Vista, which has more demand than it can handle for its Foundation series.

Vista has been in market with the Foundation Fund, as well as its sixth flagship fund, targeting up to $10 billion. The firm also is planning its debut micro-cap fund, which will target $400 million with a $500 million cap.

Action Item: Check out Vista’s Form ADV here: http://bit.ly/2hLK6K0

Robert Smith, CEO, Vista Equity Partners. Photo courtesy of Vista Equity Partners