Thoma Bravo raises $1.25 billion private equity fund

Thoma Bravo LLC, the private equity firm led in Chicago by industry veterans Carl Thoma and Lee Mitchell, has raised its largest-ever fund, taking in $1.25 billion.

The firm, which invests mainly in software companies, raised more than its targeted $1.2 billion in six months, and there was investor demand beyond what the fund closed at, said Mr. Mitchell, a managing director at the firm.

“We are trying to make sure we don’t let the fund grow to a size that would change anything about the way we do things,” Mr. Mitchell said.

He said he suspected that prior funds’ results were the biggest attraction for clients, but he wouldn’t disclose the past performance beyond saying the funds have delivered returns in the top 25% of funds originated in the same years.

Investors tend to be corporate and public pensions, endowments and other institutional clients such as Massachusetts Pension Reserves Investment Management Board, which committed $100 million, and San Francisco City & County Employees' Retirement System, which contributed $20 million.

It was not an easy fundraising environment, said Mr. Mitchell, who along with Mr. Thoma once worked for the prominent though now defunct Chicago-based Golder, Thoma, Cressey, Rauner privateequity firm.

“Investors across the board are more cautious today than they were before the experience everyone had with the recent recession — that’s true not only in private equity, but I think it’s also true throughout all the asset classes,” he said. “People still remember how things looked at the worst part of that period.”

Thoma Bravo, which also has an office in San Francisco with two additional managing partners, including Orlando Bravo, already has started investing the fund, its 10th, paying $1.3 billion earlier this month for web security company Blue Coat Systems Inc. and buying digital media company Telestream Inc. last month for an undisclosed amount. Private equity firms typically use debt in making acquisitions.

Thoma Bravo also is still buying companies with its seventh, eighth and ninth funds. The firm raised its ninth fund in 2008, taking in $822.5 million.

Lynne Marek is a writer for Crain's Chicago Business, a sister publication of Pensions & Investments.