Vista’s Record $5.6B Continuation Fund Highlights Ongoing Exit Drought
Vista Equity Partners has raised $5.6 billion to hold onto one of its portfolio companies and shift it into a new vehicle, in what it claims is the largest single-asset private equity continuation vehicle in terms of new capital raised, total transaction size and total enterprise value.
Vista raised $5.6 billion to keep Cloud Software Group by moving the company into a new continuation vehicle, a spokesperson confirmed in an email. Vista created the company in 2022 through a $16.5 billion buyout deal that combined two separate companies, Citrix and Tibco, according to a press release.
The vehicle’s $5.6 billion tab includes $2.7 billion in fresh capital from new investors and $2.2 billion from Vista’s seventh and eighth flagship buyout funds, the spokesperson said. This accounts for $4.9 billion of the total, but the firm did not disclose the source of the remaining $700 million.
The company will move to the continuation fund at a 5% discount to its valuation as of the first quarter of 2024, the spokesperson added. These numbers were first reported last week by Bloomberg. The deal was reported as in the works in April by Buyouts magazine, at which point about $4 billion had been raised.
[…] Still, some GPs move assets to new vehicles because they have to, not because they want to, so LPs need to perform thorough due diligence when deciding what to do with their capital, said David Goldstein, Director of Fund Services at fund administrator STP Investment Services.
“Either they haven’t extracted all the value they want from an investment, or… the vehicle that that current investment is in is coming to maturity, and they have to dispose of it somehow,” he said. “They have an obligation to give money back to investors.”
That said, if LPs in the original vehicle know the asset, the due diligence process can be simpler, though they should be aware continuation funds are a long-term bet, he added. “LPs could be potentially locking up their capital for another five to seven years, if not longer,” he said.
Read what David and other subject matter experts had to say in FundFire here.
