Finding the next Thoma / Vista?

Currently a second year analyst at an EB and researching firms ahead of on-cycle. Interested in joining funds people think are up and coming, the "next Thoma / Vista - tier"  funds, to the extent they exist. In other words, which funds today are most like where Thoma / Vista were ~5 years ago? I'm speaking more from a size / returns / growth trajectory perspective, and doesn't necessarily have to be tech. A few of the firms I've been looking into are below, along with my thoughts - please let me know if any other recommendations and if I'm totally off base. Thanks!

 

Already massive, nearing MF

Insight Partners (latest fund $9.5) - pros: great returns, software space will likely continue to have strong tailwinds, fundraising now for $12 bn fund. Cons: Large team / established platform = limited upward mobility, heavy sourcing at the junior level

Platinum Equity (latest fund $10) - pros: returns, successful niche in operationally intensive, distressed investments. Cons: culture, not sure how much bigger a "bottom feeder" fund can get 

TA Associates (latest fund $8.5) - pros: very established name, strong returns, interesting mix of growth and traditional buyout, fundraising now for ~$12 bn fund. Cons: extremely large existing team, heavy sourcing at the junior level

Strong outlook

Francisco Partners (latest fund $7.5) - pros: recent returns have been solid, tailwinds in tech sector. Cons: broad tech investing strategy will pin them with established tech MFs (SLP, Thoma etc) and not sure how much more appetite there is among LPs for these types of funds, historic returns have been volatile

Clearlake Capital (latest fund $7) - pros: great returns, unique strategy with flexible mandate across cap structure and growth / distressed. Cons: increased interest in preferred / minority investing may reduce effectiveness of strategy, recent fund performances difficult to gauge given frequency of fundraising

Veritas Capital (latest fund $6.5) - pros: stellar returns, successful industry focus in gov services / HCIT, read they would be fundraising again in H2 2021 for presumably ~$10bn fund. Cons: niche industry (may be offset by move towards more non-gov tech), recent fund performances difficult to gauge given frequency of fundraising

Genstar Capital (latest fund $7) - don't know much about these guys except that they have great returns, strict focus on MM type deals, fundraising now for $10bn fund

BDT Capital (latest fund ~$9) - limited information here as well, but know that they have grown a ton recently. Not sure on growth outlook given constraints of focus on family businesses and investments in "old world" economy businesses like consumer and industrials

KPS Capital (latest fund $6) - pros: stellar returns, value creation from high operational involvement, 30% inventive fee indicates strong LP interest. Cons: unsure if highly operationally intensive, distressed fund is scalable to $10bn + territory, invest exclusively in "old world" industrials businesses that may not be the sexiest 

Established firms with strong brand name with decent returns in the past few years. 

GTCR, TH Lee, Golden Gate, Oak Hill, MDP, Berkshire, Welsh Carson, etc

 

Comments (6)

 
Feb 21, 2021 - 12:36pm

 

I'd second most on your list.. Veritas in particular has been on a tear but have to wonder how much more runway there is without expanding their focus beyond government services / adjacent tech.

 

Brookfield, despite doing some of the largest LBOs in recent times (JCI battery, Westinghouse,  barely missing out  on TKE elevator) flies under the radar perhaps because it's always been more real estate and infrastructure focused. Its funds though are in top quartile and they'll likely make at least  5x on Westinghouse- which would be a $5bn pay day. 

Tinicum- more of a family office but have expanded to LPs and recent returns have been more than stellar. 
 

Gamut- former Apollo partners within $1bn inaugural fund.. have hit ground running. 
 

established but growing- Jordan, American securities, sycamore 

 

 
Feb 21, 2021 - 1:02pm

All the funds you mentioned are already very relevant in the LP world... Francisco has posted insane returns as far as I am aware of. Agree with comment above that Gamut is on to something and it seems that Cove Hill / Cornell are getting attention as well although they are at a relatively smaller scale.

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