Vista Equity Partners, the world’s 16th largest private equity firm according to the PEI 300, is exploring a single-asset continuation fund process to extend hold over a portfolio company it acquired a decade ago, Secondaries Investor understands.
The asset is Cloud Software Group, a California-based software solutions company comprising two main businesses, TIBCO Software and Citrix Systems, according to three sources familiar with the matter.
Vista bought TIBCO in a $4.3 billion take-private deal in 2014 through its fifth flagship fund. Eight years later, Vista and Evergreen Coast Capital, an affiliate of Elliott Investment Management, acquired Citrix for $16.5 billion and combined it with TIBCO to form Cloud Software Group.
Vista manages $101 billion in assets, according to affiliate Private Equity International data.
The single-asset CV process is in the early stages, according to the sources.
This appears to be Vista’s first continuation vehicle, Secondaries Investor understands.
It is likely that Vista will only move part of its stake in Cloud Software into the continuation fund because of the size of the company, according to one of the sources.
“It could be too big to digest,” the source said.
The size of the transaction will likely be over $1 billion, depending on how much of a stake Vista put into the CV, the same source added. The two other sources said the transaction could be around $2 billion.
A continuation fund would also give the option to LPs in the older funds to cash out of their stakes in Cloud Software, or roll their interests into the new vehicle. Pricing will be a factor in how well-received the deal is by LPs.
Vista has reportedly explored a sale of TIBCO over the years, according to past media reports.
Other recent deals have included large assets in which the sponsor only moves a portion of its stake. A recent example is Leonard Green & Partners, which sold around 16 percent of its interest in SRS Distribution into a CV, affiliate title Buyouts reported in April. The process allows Leonard Green to receive distributions in the CV while still maintaining exposure to SRS through the main fund.
Another example is Madison Dearborn which recently ran a three-asset CV process led by HarbourVest Partners, Neuberger Berman and Carlyle’s AlpInvest Partners, Buyouts reported. The original fund would continue to hold partial stakes in the three assets even as it sold into the continuation fund.
A question for buyers in CV deals with large assets is exit potential, especially as the IPO exit channel continues to be slow, according to a source.
Evercore is advising the transaction, according to the three sources.
Vista declined to comment. Evercore did not respond to a request for comment by press time.
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