Thoma Bravo LLC, one of the private equity industry’s largest and most prolific investors in technology companies, is looking to raise around $7 billion for its latest buyout fund, by far its biggest ever, according to people familiar with the matter.
Thoma Bravo’s fundraising ambitions underscore private equity’s insatiable appetite for mature technology companies, particularly in the enterprise software space. These companies’ strong cash flows and their need to restructure their operations make them attractive leveraged buyout targets.
Thoma Bravo finalized the fundraising target for its latest buyout fund, dubbed Fund XII, late last month, and has already started marketing it to its investors, the sources said this week, asking not to be identified because the fundraising is confidential.
A Thoma Bravo spokesman did not respond to a request for comment.
The fundraising comes as Thoma Bravo ramps up investing and increasingly looks at bigger deals. Last month, it partnered with private equity firm Silver Lake Partners LP to acquire information technology management software company SolarWinds Inc for $4.5 billion.
Earlier this year, Thoma Bravo sought to lead a consortium that would have taken ATM maker NCR Corp private for around $9 billion, including debt, but could not finalize a deal due to disagreements over price, sources told Reuters at the time.
At $7 billion, Fund XII would be almost double the size of its predecessor, which completed fundraising in May 2014, amassing $3.7 billion. The previous fund, Fund X, completed fundraising in February 2012, securing $1.25 billion.
Fund X generated an internal rate of return (IRR) of 34.3 percent as of the end of March 2015, according to California State Teachers’ Retirement System (CalSTRS), one of Thoma Bravo’s investors.
By comparison, the entire private equity portfolio of CalSTRS generated an average IRR of 10.7 percent.
In April, Thoma Bravo, which is based in Chicago and San Francisco, also raised a supplemental ‘top off’ fund, called Special Opportunities Fund II, to pursue additional opportunities. This fund raised close to $1.1 billion.
Vista Equity Partners Management LLC, another technology-focused private equity firm and one of Thoma Bravo’s main competitors, is seeking $8 billion for its latest private equity fund, sources familiar with the matter have previously told Reuters.
PE HUB reported last month that Thoma Bravo told its investors that it would seek between $5 billion and $7 billion for Fund XII.
Photo courtesy of Thoma Bravo