Vista Credit Partners, the credit investing arm of Vista Equity Partners, announced today that it has raised its third fund at $2.3 billion, exceeding its original target by $800 million. Private equity buyers like the speed and certainty of execution that direct loans offer, and are bypassing traditional lenders to get them.

“As great companies remain private longer and equity dilution continues to be a pinch point, our team is focused on working with the best software and technology companies as a credit-focused capital solutions provider and value-added partner for growth,” said David Flannery, president of Vista Credit Partners. “Our capital supports the founders, owners and management of a wide range of software and technology companies, as we bring bespoke solutions designed to enable companies and their founders to expand their business and fulfill their potential, often with less dilution to their equity.”

VCP will focus non-sponsored lending, private credit, syndicated credit and opportunistic secondary market investing in the software space. The firm has completed more than 415 software and technology transactions and has deployed more than $7.6 billion since it was formed in 2013. VCP currently has an AUM of over $5.2 billion.

The number of alternative lenders, including those affiliated with PE firms, has risen since since the global financial crisis, and banks along with other traditional lenders will continue to face rising competition from them.

Tomorrow we’ll have an in-depth look at direct lending when we publish the online version of the October magazine cover story. I spoke with Carlyle’s Taylor Boswell, WhiteHorse Capital’s Stuart Aronson, Varagon’s Walter Owens, First Eagle’s Chris Flynn, Flat Rock’s  Robert Grunewald and Monroe’s Chris Lund for that story. Tune in tomorrow.

Demitri Diakantonis