Firms & Funds

Vista sets $8 bln target for Fund VI, no hard cap

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Vista Equity Partners
Robert Smith, CEO, Vista Equity Partners. Photo courtesy of Vista Equity Partners
  • Oregon commits $500 mln to Fund VI
  • Oregon committed $200 mln to Fund V
  • CEO Smith said firm could have raised up to $10 bln for Fund V

Vista Equity Partners set an $8 billion target for its sixth private equity fund, according to Oregon Investment Council documents.

The Robert Smith-led firm did not set a hard cap for Vista Equity Partners VI, which will likely rank among the most in-demand private equity funds of 2016.

Oregon committed up to $500 million to Fund VI at its February 3 meeting, spokesman James Sinks said in an email. Oregon’s allocation would be more than twice the size of its $200 million commitment to Vista Equity Partners Fund V, a $5.8 billion 2014 vintage fund.

Fund VI’s terms were unavailable. However, Oregon documents said the management fee, preferred return and carry “are typical for funds of this type” and that transaction and monitoring fees will fully offset the management fee.

While Fund V has yet to generate meaningful returns, older Vista funds are top performers for Oregon. The pension system’s $100 million commitment to Vista’s $3.5 billion 2011 vintage vehicle netted a 21.4 percent internal rate of return through September 30, according to pension documents. Fund III, a $1.3 billion 2007 fund, netted 31.7 percent as of the same date.

As with previous funds, Vista’s Fund VI will acquire enterprise software companies with valuations between $400 million and $5 billion. The firm uses an operationally intensive approach with its portfolio companies, which includes the implementation of 83 Vista Standard Operating Procedures. The firm has not lost money on a control deal since its inception, according to Oregon documents.

Vista’s strategy and history of strong returns have made the firm a popular choice for LPs. In a keynote speech at the Columbia Business School Private Equity & Venture Capital Conference last year, Smith claimed the firm could have raised as much as $10 billion for its fifth fund.

“The thing that I tell our LPs is, the only reason we raised $6 billion [with Fund V] is because we didn’t raise $10 [billion],” Smith said during his keynote address. “We’ll be back in the market soon enough as we deploy this capital.”

Vista did not respond to requests for comment.

Action Item: For Oregon’s report on Vista, visit http://1.usa.gov/1KsBodv

Photo of Robert Smith courtesy of Vista Equity Partners