Thoma Bravo Closes Discover Fund, Focusing on Lower Middle-Market Software Developers

Private equity firm Thoma Bravo LLC has capped fundraising at $1.074 billion for a fund targeting lower middle market software company deals. The Thoma Bravo Discover Fund announced its first investment in January—buying Infogix Inc., a Naperville, Illinois, data analysis company from an affiliate of H.I.G. Capital for an undisclosed price.

Chicago-based Thoma Bravo’s flagship Fund XI, which closed at $3.66 billion and began investing in 2014, and its $1.065 billion Special Opportunities Fund II, which launched in 2015, both focus on software companies in upper middle market.

Discover Fund will invest in opportunities in the software and technology-enabled-services sectors that require less equity capital than Fund XI and Special Opportunities Fund II—typically for companies with annual revenues of $30 million to $150 million.

“Although earlier Thoma Bravo funds made many investments of the size targeted by the Discover Fund, the increasing scale of companies in the consolidating software and technology sectors has resulted in larger funds and larger investment sizes,” says A.J. Rohde, head of Discover’s investment team. Discover will allow the firm to continue to target smaller companies.

Thoma Bravo’s managing partners are Seth Boro, Orlando Bravo, Scott Crabill, Lee Mitchell, Holden Spaht and Carl Thoma, with Rohde and Robert Sayle serving as partners. The firm’s PE funds have more than $9 billion in investor commitments.

Thoma Bravo’s recent deals included its partnering with Silver Lake Partners PE firm to buy SolarWinds Inc. (NYSE:SWI), maker of software to manage computer networks, for $4.5 billion—a deal that closed earlier in February; its purchase of MedeAnalytics Inc., provider of cloud-based financial performance analytics for health care organizations, in September 2015; and buying iPipeline of Exton, Pennsylvania, which provides cloud-based sales software for life insurance companies, in August 2015.

The firm won the 2014 Mergers & Acquisitions Deal of the Year with its $930 million purchase of TravelClick from Genstar Capital Management LLC and Bain Capital Ventures. Carl Thoma spoke about high valuations and whether he expects them to continue.

Kirkland & Ellis LLP acted as Thoma Bravo's legal adviser for the Discover Fund.

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