Thoma Bravo raises more than $1 bln for debut mid-market fund

Thoma Bravo’s first lower middle market fund, which closed Tuesday on its $1.074 billion hard cap, has the same strategy as the firm’s flagship pools. Just on a smaller scale.

The Thoma Bravo Discover Fund will target investments in application software and infrastructure, as well as technology-enabled businesses. Discover doesn’t focus on EBITDA. Instead, it seeks companies with revenue between $30 million to $150 million, said A.J. Rohde, a Thoma Bravo partner.

Discover has already made its first investment, acquiring Infogix Inc, a provider of data analytics, in January. HIG Capital was the seller.

Discover will focus on investments up to $150 million equity, a Thoma Bravo spokesman said. Anything above $150 million would be considered for the flagship funds, the spokesman said.

“It’s great for us to have the opportunity to return to the lower middle market,” Rohde said.

Volatility in the broad market is creating an “enormous opportunity” for the Discover fund, Rohde said. Many venture-backed companies that are now public, and have good recurring revenues, are losing money, he said. “These high quality growth stocks have gotten hammered which creates a nice buying opportunity for us,” he said.

The Chicago and San Francisco-based private equity firm needed roughly four months to market the pool, Rohde said. Fundraising for Discover began in earnest in September and hit a first close, collecting nearly two-thirds of capital, by the end of November, he said. Thoma Bravo allowed the remaining one-third to wait until 2016. “We gave people time to finish their allocations,” he said.

Nearly all, or about $1 billion, of Discover’s $1.074 billion came from existing LPs of Thoma Bravo’s flagship pools, Rohde said. “We hit the target and our cap big time,” Rohde said.

Rohde, head of the Thoma Bravo team committed to Discover, will be looking to add one more person, a principal, he said.

Other funds

Thoma Bravo isn’t done with fundraising. The firm is trying to raise its latest flagship fund, which has a $7 billion target, Reuters News reported in November. The firm’s prior pool, Fund XI, collected $3.65 billion in 2014. Thoma Bravo also closed its second Special Opportunities “top-off” fund in April with more than $1 billion. That fund invests side-by-side with the flagship vehicle.

Thoma Bravo Fund XI LP, a young fund, is producing a -1.95 percent IRR since inception, according to performance data from the California State Teachers’ Retirement System. Performance data for the Special Opportunities fund was not available.

Action Item: To contact Thoma Bravo call (415) 263-3660

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