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Vista hits first close on debut debt fund, talks to LPs about flagship Fund V

Vista Equity Partners has continued its run of strong fundraisings, announcing yesterday it held a $1.1 billion final close on its second small and mid-cap fund, which had been targeting $500 million. Last year, the firm closed its fourth flagship fund on $3.5 billion, well above its target.

Now I’ve heard Vista held a first close in October on its debut credit fund, which is targeting $600 million, according to an investor in the fund. The first close was on roughly $120 million, according to the investor.

Vista launched its debut credit fund earlier this year that will target enterprise software loans, a majority of which will be for the firm’s own deals, sources have told me.

Even more significant, Vista has been talking to its limited partners about launching its fifth flagship fund this year, the investor said. The firm has indicated it may set a target of $3.5 billion, the investor said.

Vista, of course, declined to comment on any of this.

The firm is one of only a few in the market enjoying almost unlimited demand for their investment vehicles. In Vista’s case, its past performance has attracted LPs. The $1.3 billion Vista Equity Partners III was generating a 30.6 percent internal rate of return and a 2.6x multiple as of March 31, 2013, according to performance information from the California Public Employees’ Retirement System.

The first Foundation fund – Vista’s small and mid-cap investment fund – was producing an 18.1 percent IRR and a 1.4x multiple as of March 31, according to the CalPERS information.

While the firm’s flagship fund and its Foundation Fund series are tested strategies and have been proven out over time with solid track records, it will be interesting to see if Vista takes longer to hit its target on the debt fund, as that is a new strategy for the firm. Even for the best firms, new strategies can be tough sells for most LPs.

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