US-based Vista Equity Partners has raised US$5.6 billion to create a continuation fund for Cloud Software Group.

The fund includes US$2.7 billion in new capital and US$2.2 billion from existing funds, Vista Equity Partners VII and VIII.

Cloud Software Group, which owns Citrix and Tibco, was formed in 2022 through a US$16.5 billion leveraged buyout.

The assets will transfer to the continuation fund at a 5% discount based on their Q1 2024 valuation.

Investors in Vista’s fifth buyout fund were offered a 4.1 multiple on invested capital if they chose to cash out instead of reinvesting.

Coller Capital is among the backers of the new fund.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Continuation funds emerge as critical liquidity solution in challenging exit environment

Vista’s record-breaking $5.6 billion continuation fund demonstrates how these vehicles have evolved from niche structures to mainstream liquidity solutions amid persistent exit challenges.

The secondaries market reached a record $152 billion in 2024, with GP-led transactions like continuation funds accounting for nearly half at $72 billion, showing the rapid growth of this strategy 1.

These funds have become increasingly sophisticated, with a shift toward single-asset structures like Vista’s Cloud Software Group transaction, allowing firms to retain high-potential assets beyond traditional fund lifecycles 2.

The number of continuation funds launched industry-wide increased significantly from 14 in 2023 to 27 in 2024, reflecting their growing acceptance as a viable exit alternative 2.

Vista’s approach, offering existing investors a 4.1x return while bringing in new capital, exemplifies how these structures can balance the competing needs of liquidity-seeking LPs and GPs wanting to maximize long-term value from specific assets.

This trend directly addresses the broader market challenge highlighted in McKinsey’s 2025 report showing private equity fundraising at its lowest level since 2016, creating pressure for alternative liquidity solutions 3.

2️⃣ Vista’s strategic evolution reflects broader private equity adaptation

Vista’s journey from a $3.5 billion Fund IV in 2012 to managing over $100 billion today demonstrates how specialized focus can drive exceptional growth in private equity 4.

The firm’s exclusive focus on enterprise software investments has proven prescient as technology valuations have outperformed other sectors, enabling Vista to deliver strong returns like the 22.1% IRR reported for Fund IV 5.

Vista’s approach of retaining Cloud Software Group (formed from the $16.5 billion Citrix-Tibco combination) highlights its long-term conviction in specific assets, even as the broader industry struggles with exit timelines.

This continuation fund transaction shows how Vista has evolved from traditional fund cycles to more flexible capital structures that maximize value, particularly important for complex investments like the Citrix-Tibco combination that may require longer holding periods.

The transaction demonstrates Vista’s ability to adapt to market conditions, as the broader private equity industry shifts toward operational transformation rather than financial engineering to drive returns, as noted in McKinsey’s 2025 market report 3.

3️⃣ Shifting power dynamics in private equity favor established managers

Vista’s ability to raise $2.7 billion in fresh capital for its continuation fund exemplifies how established managers with strong track records can attract capital even in challenging fundraising environments.

Bain’s 2025 private equity outlook highlights that fundraising remains particularly difficult for smaller funds, as limited partners increasingly favor larger, established managers with proven performance 6.

The participation of secondary investor Coller Capital in Vista’s continuation fund reflects the growing institutionalization of the continuation fund market, with specialized investors developing expertise in these complex transactions.

Vista’s approach of transferring Cloud Software Group at a 5% discount to its Q1 2024 valuation demonstrates the careful balancing act required to satisfy both existing and new investors while maintaining credibility in asset pricing.

The transaction structure, drawing $2.2 billion from Vista’s own seventh and eighth flagship funds, shows how large managers can leverage their platform to provide liquidity solutions that smaller firms cannot match.

This power dynamic is reflected in broader industry trends, with Bain reporting that larger deals (valued over $1 billion) represented 77% of total deal value in 2024, indicating concentration of capital among established players 6.

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