Vista Equity Partners, a leading private equity firm known for its focus on technology investments, is aiming to raise up to $5 billion to further invest in Cloud Software Group, the parent company of enterprise software giants Citrix and Tibco. This ambitious move is set to be one of the most significant transactions in the secondary market for private equity stakes.
Vista, which manages around $100 billion in assets, is offering existing investors in the Cloud Software Group the option to either cash out or reinvest in a new fund with a refreshed timeline. This continuation fund would not only allow current investors to stay on board but also bring in new participants, creating a mix of seasoned and fresh capital backing the software company.
According to sources close to the deal, Vista is promoting the continuation fund as an opportunity for investors to support a financially strong company operating in a stable segment of the information technology market. The firm sees considerable potential for Cloud Software Group to grow further through strategic acquisitions, making this investment opportunity particularly attractive.
For investors who originally backed the company a decade ago through Vista's fifth flagship fund, this transaction presents a chance to exit their investment. Vista initially invested in what is now Cloud Software Group through this fund, which raised approximately $5.8 billion when it closed in 2014. However, Vista believes that the company still has substantial growth potential, even as the original fund approaches its end.
The new group of investors is being led by Coller Capital and the secondary investment division of Goldman Sachs Asset Management. Vista and its employees are also expected to make significant cash contributions to the continuation fund, with additional capital likely coming from Vista’s latest flagship fund. However, the final structure and size of the deal may still evolve.
Investment bank Evercore is advising Vista on the transaction, ensuring that all aspects of the deal align with the firm's goals and investor expectations.
Cloud Software Group has been shaped by a decade of mergers and acquisitions, beginning with Vista’s acquisition of Tibco in 2014. Over the years, the company has expanded through several strategic acquisitions, including the analytics firm Statistica in 2017 and data automation provider Scribe Software in 2018. The most notable development came in 2022, when Tibco merged with Citrix to form a $16.5 billion enterprise, supported by Vista and Elliott Investment Management’s private equity division.
The market for sponsor-led secondary deals, like the one Vista is pursuing, has seen significant growth. According to Jefferies Financial Group, the first half of this year alone saw a 56% increase in such transactions, with $28 billion in deals completed. Continuation funds represent the largest segment of this burgeoning market, providing fund managers with a way to extend their investments while offering liquidity to investors.
Cloud Software Group has seen its enterprise value rise by about 13% to $26.86 billion since the Citrix-Tibco merger in November 2022. Over the same period, the company’s adjusted pretax earnings surged by 58% to approximately $2.92 billion, underscoring the success of the merger and the strong financial position of the company.
As Vista Equity Partners moves forward with this significant recapitalization effort, it underscores the firm's confidence in the continued growth and profitability of Cloud Software Group, positioning it for further success in the competitive enterprise software market.
Comments