Vista Equity Partners has worked in an unusual clause in its contracts with private equity fund investors that gives it more financing flexibility and a leg up in leveraged buyouts, but also carries more risks for it and its investors, according to people familiar with the matter. The agreement allows Vista to temporarily finance large corporate buyouts just with the cash from its $5.8 billion fund, as against using both debt and equity to purchase companies. Under the right circumstances, this flexibility allows Vista to be nimble in auctions and secure the best possible debt financing after it has clinched a deal.Two months ago, Vista used the clause in one of the largest private equity deals of the year, committing to fund the $4.2 billion takeover of TIBCO Software Inc with equity. One day later, it secured debt commitments from JPMorgan Chase & Co and Jefferies LLC for the deal, reducing its equity exposure to $1.6 billion.The maneuver helped it not only outbid rival Thoma Bravo LLC in the TIBCO auction, but also use JPMorgan and Jefferies, which where were originally backing Thoma Bravo during the auction and were offering better financing terms, the sources said.Investors in the Vista fund, known as limited partners, include some of the largest U.S. public pension funds, including the New Jersey State Investment Council and the Oregon Public Employees Retirement Fund. These funds do not disclose to their members and retirees all the risks they undertake, because the agreements with Vista and other private equity firms are confidential. The revelations highlight how important aspects of the investment of public money in private equity are shrouded in secrecy.
JPMorgan Chase & Co. (JPMorgan Chase) is a financial holding company. Shares of JPM traded higher by 0.75% or $0.46/share to $61.93. In the past year, the shares have traded as low as $52.97 and as high as $61.93. On average, 13941500 shares of JPM exchange hands on a given day and today's volume is recorded at 10800981.
TIBCO Software Inc. (TIBCO) is a provider of middleware and infrastructure software. Shares of TIBX traded higher by 0.17% or $0.04/share to $23.66. In the past year, the shares have traded as low as $18.20 and as high as $24.90. On average, 5020070 shares of TIBX exchange hands on a given day and today's volume is recorded at 1563701.
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