Buyout titan Robert Smith’s Vista Equity Partners more than doubled its initial investment in Apptio Inc. after International Business Machines Corp. agreed to acquire the software maker for $4.6 billion.
The private equity firm, which bought Apptio in early 2019 for about $1.9 billion, told investors that the deal would return 2.1 times the firm’s investment after accounting for fees. Vista has generated $18 billion in total value by cashing in on bets since late 2021, it said in a statement on Monday.
The deal gives Smith new ammunition as he scours the globe to raise a $20 billion fund for new deals. He’s currently worth about $12 billion, making him the 152nd-richest person in the world, according to the Bloomberg Billionaires Index.
A Vista spokesperson declined to comment.
Smith is working to show pensions and investors the company has moved past his admission of tax evasion after the billionaire paid $139 million to avoid prosecution in 2020. Like other private equity firms, Vista has had to contend with higher interest rates, unpredictable markets and fears of an economic downturn as it looks to reach its ambitious fundraising goals.
Cashing In
Vista is best known for its big buyouts of software companies, as well as its detailed playbook of fixing them up and maximizing profits.
The Austin-based firm has made full and partial exits — including its $4.6 billion sale of software company Cvent Holding Corp. to Blackstone Inc. earlier this month — as well as recapitalizations, block sales and follow-on offerings.
“We are committed to building resilient enterprise software companies, which has proven to be highly attractive to strategic and financial buyers, as well as public markets,” Smith, 60, said in a statement.
Founded in 2007, Bellevue, Washington-based Apptio sells online services that help companies — including the majority of the Fortune 100 — manage their information-technology budgets, forecasting and analysis. IBM will use available cash on hand for the transaction, which is expected to be completed in the latter half of 2023, the company said in a statement on Monday.
Smith got his start as an investment banker at Goldman Sachs Group Inc. in the late 1990s, where he met billionaire Robert Brockman, who helped fund Vista’s start. By 2018, Smith’s wealth surpassed Oprah Winfrey’s to make him the richest Black person in the US.