- Perennial Investing will be permanent capital vehicle
- Will make periodic distributions to investors
- Larger firms in market seek to hold investments longer
Vista Equity Partners is talking to a select group of limited partners about its debut permanent capital program, which will be able to hold investments for long periods, according to three people with knowledge of the firm.
Vista is joining other large firms like Blackstone Group, Carlyle Group and CVC Capital Partners in finding ways to hold investments for longer than traditional PE-fund models allow.
The permanent capital program is called Vista Perennial Investing. The firm has not decided on a final target, which could go up or down depending on demand for the product, one source said. As its name suggests, the Perennial Investing vehicle will be permanent, rather than having a fixed term, and will deliver periodic distributions to investors, sources said.
Vista announced the launch of Perennial at its recent annual meeting, sources said.
Perennial Capital will focus on investments in enterprise software, like all of Vista’s other funds. Earlier this year, Vista hired Burke Norton, former executive at Salesforce, as co-head and principal of Vista Perennial. It’s not clear who else is leading the Perennial strategy. Alan Fleischmann, Vista spokesman, did not return several requests for comment.
GPs in traditional PE funds generally hold investments for five to seven years before selling to be able to liquidate the funds within their 10-year terms. Some GPs say this time frame forces them to sell out of companies without capturing their full value.
Blackstone raised $5 billion earlier this year for its debut longer-life fund, which has a 20 year term. Carlyle last year closed its long-life fund on $3.6 billion and CVC raised $5 billion for its long-term fund. Newer shops in the market, including ex-Bain Capital executive Andrew Balson’s Cove Hill Partners and North Island, formed by ex-Silver Lake co-founder Glenn Hutchins and ex-Nasdaq chief Robert Greifeld, also can hold investments for longer periods.
“There’s definitely more demand for long-life vehicles than there used to be,” Blackstone President Tony James said last year during a quarterly press call. “Very successful family offices and wealthy families over the years have had a strategy of investing into great assets, holding them a long time, but not necessarily getting the same IRR. But they get a lot richer over time. And I think a lot of the institutional investors we’re seeing are coming around and are seeing that.”
Vista has several fund families, including its flagship vehicle, middle-market fund, credit program and its most recent strategy, Vista Endeavor, its micro-cap strategy.
Action Item: Check out Vista’s Form ADV here: http://bit.ly/2AJi78r
Vista Equity Chief Executive Robert Smith speaks in front of the New Jersey Investment Council on Nov. 29, 2017. Photo by Chris Witkowsky, Buyouts.