Thoma Bravo raises $12.6 billion for latest private equity fund

(Reuters) - Thoma Bravo LLC, a private equity firm specializing in buying technology companies, has raised $12.6 billion for its latest flagship fund, the firm’s managing partner, Orlando Bravo, said on Monday, amid strong investor demand for deals in the sector.

The buyout firm’s fundraising hit its “hard cap” limit for Thoma Bravo Fund XIII, with commitments from investors exceeding the maximum size set for the fund.

“It was as quick a fundraising as we’ve had for the last four funds. We launched the fund in March and after six months we were oversubscribed,” Bravo said in an interview.

Thoma Bravo plans to officially announce the completion of the fundraising on Tuesday.

Based in Chicago and San Francisco, Thoma Bravo acquires technology companies in sectors ranging from cybersecurity to business software. Its deals include the $2.1 billion acquisition of cybersecurity firm Imperva Inc and the $3 billion purchase of data analytics firm Qlik Technologies.

The latest fund is two-thirds bigger than its $7.6 billion predecessor, Thoma Bravo Fund XII, which was raised in 2016, and more than three times the size of Thoma Bravo Fund XI, which totaled $3.65 billion when raised in 2014.

The growth is emblematic of the overall private equity industry, which raised a record $566 billion in 2017 and $426 billion in 2018, according to market research firm Preqin.

The influx of cash has raised some concerns whether firms can continue to find enough lucrative deals to deliver attractive returns for investors, which range from public pension funds to wealthy families. Private equity firms had $1.2 trillion that they had raised and had yet to invest at the end of 2018, according to Preqin.

Bravo said the biggest hurdle to good deals was elevated valuation expectations from acquisition targets, rather than competition from private equity peers.

“It is going to be very difficult to generate those spectacular returns (of prior funds),” Bravo said. “At the same time, and we have shared this with our limited partners, we are very confident that we will continue to significantly outperform.”

Thoma Bravo’s four funds prior to Fund XII had net internal rates of return -- a key benchmark for investment returns -- ranging from 21 percent 38 percent, according to the Arkansas Teacher Retirement System, which committed up to $30 million to Thoma Bravo’s most recent fund.

Reporting by Joshua Franklin in New York; Editing by Leslie Adler