The list of co-investors that lost money on Vista Equity Partners’ acquisition of Pluralsight includes Saudi Arabia’s sovereign wealth fund and a second Australian super fund.
A handful of Vista’s big clients — including the Public Investment Fund, Riyadh — directly joined the acquisition and contributed equity, according to people with knowledge of the matter, asking not to be named discussing a private transaction. The exact size of PIF’s loss could not immediately be determined. PIF has about $925 billion in assets.
Vista acquired the educational-software company in 2021 and lost about $4 billion on the transaction along with its co-investors following a debt restructuring that wrapped up last week, Bloomberg News has reported.
The PIF didn’t respond to a request for comment. Vista and Pluralsight declined to comment.
The wipeout has created a painful situation for the limited partners that acquired the company directly with Vista. AustralianSuper, the country’s largest pension, is writing off A$1.1 billion ($750 million) on Pluralsight.
Typically, sovereign wealth funds, pensions and other large money managers diversify their exposure by investing in a private equity fund, which then buys a group of companies. But co-investing, when the money managers invest directly in an individual company alongside a private equity firm, provides a way to cut back on fees and put large sums to work quickly.
Gulf sovereign funds have increasingly been looking to get co-investment rights on deals as they seek better returns and want to boost their reputations as world-class asset managers. But if such investments sour, it leaves the limited partners — alongside the private equity firms — open to losses.
By late 2023, Pluralsight had started to stumble under pressure because of higher interest rates, increased competition and softening demand for its services, Bloomberg reported. Negotiations with the firm’s debt holders led Vista to give up the keys to the company to a group of private credit lenders led by Blue Owl Capital.
Australian Retirement Trust is the second of the country’s major superannuation funds to reveal losses on the U.S. education software firm as private credit lenders take ownership of the company.
The nation’s no. 2 super fund, which manages more than A$300 billion ($204 billion) of assets, wrote off its A$75 million investment in Pluralsight earlier this year, an ART spokesperson said in an emailed response to questions.
Pluralsight represented less than 0.5% of our private equity portfolio and less than 0.05% of fund assets,” the spokesperson said, adding it “was one of thousands of individual investments within our diversified private equity portfolio.”
ART’s loss is dwarfed by a writedown at its biggest rival, with the country’s largest pension AustralianSuper losing A$1.1 billion on its investment. The fund had invested in Vista Equity Partners, which bought Pluralsight three years ago, according to the super's latest disclosures.
Vista and its co-investors are losing around $4 billion on their original equity investment following the debt restructuring that wrapped up last week.
Australia’s retirement industry is nearing A$4 trillion in assets. As the industry has rapidly grown, it has shown an increasing appetite for private assets, which now make up around one fifth of investments. That’s brought increased scrutiny from regulators, who this month flagged such investments as a priority.
