Vista could raise up to $3 bln for permanent capital vehicle

  • Fund being marketed to select LPs
  • Will be permanent capital for long hold periods
  • LPs will be granted periodic distributions

Vista Equity Partners may raise up to $3 billion for its debut permanent capital fund, which the firm has been marketing to select limited partners, according to a source who has heard the pitch.

Vista has been in the market in a limited way since last year with Vista Perennial Fund, the firm’s first permanent capital pool. It’s not clear if the fund is officially in fundraising or if Vista is still testing the market.

As of November, the firm had not decided on a final target, and it’s not clear whether the firm has set an official target. The fundraising goal could go up or down depending on demand, a source told Buyouts in a prior interview.

Alan Fleischmann, a spokesman for Vista, declined to comment.

Vista is one of several firms with permanent-capital funds, which give managers the ability to hold investments for longer time periods. Other firms pursuing similar strategies include Blackstone Group, Carlyle Group and CVC Capital Partners.

The trend, “started a few years back with a lot of very large investors. It’s now trickling its way down into the bulge bracket of LPs,” said Mike Elio, partner at StepStone Group at PEI’s CFOs & COOs Forum in late January. “In an investment environment attempting to deploy significant sums into private markets, long-dated funds are gaining broader traction and are here to stay.”

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 the Perennial program last year, Buyouts reported.

Perennial Capital will focus on investments in enterprise software, like all of Vista’s 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.

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.

Update: This story was updated to include quotes from Mike Elio, who spoke at a recent industry conference.

Action Item: Read Vista’s Form ADV here:

Robert Smith, founder, chairman and CEO of Vista Equity Partners, speaks at the Milken Institute Global Conference in Beverly Hills, California, on May 2, 2016. Photo courtesy Reuters/Lucy Nicholson