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lmao I told all my friends at the TB recruiting event in November that TB and Vista gonna be f and FP def not, nobody believed; now, everyone is silent, just how ironic it is that ppl never admit they are wrong.
But back to FP, they did not pay as high as TB or Vista did back then; their strategy is never using higher bid to win a deal but to verticalize, not even saying they have a strong HC vertical, which is least impacted by AI. Pure software is only one team among four teams while the other three is very verticalized
I appreciate the take, Analyst 1, but unlike the 2022 downturn, it's not just a "high multiple" problem when some software companies are having their long-term raison d'etre potentially being wiped out. And sure, I know they have non-tech/non-software verticals, but they did make their hay doing tech "growing up" and are probably over-indexed to the sector today as well.
U question is asking compared to TB and Vista, yes compared to them they are way less screwed😂😂
FP is very indexed to tech. They have yet to exit a lot of their 2020-2021 positions and still have a lot of pre 2020 companies in their portfolio as well. They have no losses because they refuse to exit those terrible investments. Not sure what the people above are talking about. It's pretty clear from a simple look at their website and deal history.
bump
Just take a look at how the debt is trading. Hint: FP is screwed similar to any other fund heavily indexed to tech. For example, Perforce is a large investment for them from 2019 and is trading horribly in the debt markets. Going to be a massive loss if not a zero.
Every software company is facing multiple compression due to AI displacement risk and a lot of FP portfolio companies are trading just as badly as TB or Vista ones on the debt markets. It's just not been as much talk of town because TB and Vista are exposed to a much larger extent due to their larger size.
this is generalizing a bit, but FP does more value oriented deals at lower multiples than TB/Vista which pretty much only pay sky high multiples for what they believe are high quality assets (FP also will pay up selectively), and these are generally the companies with poor debt trading levels. and debt trading below par doesn't necessarily mean there is zero sponsor equity value for a number of reasons
This. Debt trading below par does not mean the sponsors equity is a zero. In fact the deal can still be profitable for the sponsor for several reasons.
FP does not do value investing, I do not know what you are talking about. Work in a top tech group and FP is one of the sponsors who are known to pay up for what they like. Just because they don't compared to TB/Vista, doesn't mean they don't often aggressively outbid everyone else by a lot in processes.
Second, just look at their portfolio and how many software companies they bought at 2019-2021 multiples, including some of their largest deals like Boomi $4bn deal from 2021 and LogMeIn $4.3bn from 2019, not even counting the various smaller portcos they still hold from that period. Those multiples have compressed dramatically and most of these older investments are underwater, which is exactly why they aren't selling, they don't want to book their losses. On the debt point, sure, trading below par doesn't always mean zero equity value, but when a significant chunk of your portfolio can barely cover interest payments and face risk of terminal value going to zero, the equity is functionally impaired regardless of how you want to frame it.
We got blown out of the water two times by FP in $1bn+ EV deals in software. Anyone who thinks they do value investing is off their rocker. Do with that what you will - they seem like nice folks to be fair.
Exactly this, not sure where this misconception came from. FP is consistently tiered as a top sponsor in software sell-side processes precisely because they're willing to pay up. Vista/TB have zero price discipline and will outbid anyone for assets they like, but that doesn't mean FP is far behind, they just look disciplined by comparison, which is a low bar. Vista in particular paid genuinely insane premiums post-2020 and the portfolio has reflected that. Vista has terrible performance this decade and they rarely exit anything or return capital to LP's these days.
We're invested in all three. AMA
How were Q4 marks relative to expectations (broadly)? Do you expect GPs to mark down for Q1 marks or hold the line? Not at any of the three but have exposure to large cap tech. The Q4 marks are laughable... amazingly slightly up.
Q1 accelerated Saaspocaplyse. I’m wondering if we’ll actually mark down then or keep things basically flat with no attachment to reality.
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This is a good question for all tech PE in general - did Q1 marks reflect public software price action or did marks stay roughly unchanged from Q4.. and if the latter what rationale did the sponsor provide.
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