Vancouver-based private credit investor Vistara Growth has officially launched its sixth fund, for which it ultimately hopes to raise $500 million USD ($700 million CAD).
Vistara hopes to secure an initial close of between $200 million and $250 million USD for the Vistara Growth Structured Opportunities Fund by the end of November. The firm is already well on its way to that target thanks to an anchor commitment of up to $125 million from longtime limited partner (LP) Ryan Beedie through his family office.
“Raising a new fund every two years is not simple.”
Randy Garg, Vistara Growth
The Vancouver billionaire revealed that commitment this summer, alongside news his Beedie Capital had purchased a 50-percent ownership stake in Vistara’s general partnership (GP), splitting Vistara’s 20-percent share of gains from the new fund and annual management fee.
While the strategy behind Vistara’s sixth fund will remain the same as its predecessors, providing a combination of debt and equity to mid- and later-stage technology companies across North America, the fund structure will be significantly different.
Since 2015, Vistara has raised and deployed five closed-end funds that have grown progressively larger. Though it had seen success with this approach, the firm saw what it thought was a better path forward through its latest investment vehicle, Vistara founder and managing partner Randy Garg told BetaKit in an exclusive interview.
“Raising a new fund every two years is not simple,” Garg said. “It’s very distracting. It takes a lot of effort.” It had also become a burden for its LPs navigating capital calls and distributions across so many different vehicles, he added.
RELATED: Vistara Growth closes $321-million USD fund after “friend-raising to the max”
Garg said many of Vistara’s LPs are “set-it-and-forget-it-type investors,” noting that when they approached Vistara with the idea of instead creating a permanent fund that they could take the income out of and let their principal compound over a longer period, the firm listened.
According to Garg, the Vistara Growth Structured Opportunities Fund’s permanent, evergreen structure allows the firm to offer greater flexibility on its repayment terms. It also permits Vistara to hold its warrants and convertible positions for longer because it isn’t on the same clock.
“It doesn’t have a number on it because this is going to be the flagship forever fund,” Garg said.
Vistara closed its $321-million USD fifth fund a year ago after “friend-raising to the max” in a nearly two-year process that ultimately fell short of its initial, $386-million USD goal. At the time, Garg indicated that the firm hoped to raise a larger sixth fund and emerge from the so-called “tweener” category by rallying institutional LPs and securing more support outside of British Columbia. To date, over 90 percent of that capital has come from BC.
The 15-person firm focuses on mid- and later-stage private tech companies with between $10 million and $100 million CAD in annual recurring revenue in areas like AI, FinTech, and healthtech. While it typically invests in venture-backed businesses at the Series B stage and beyond, it also finances bootstrapped firms seeking capital to finance organic growth, mergers and acquisitions, or shareholder liquidity initiatives without diluting ownership.
Vistara creates tailored investment structures composed of debt, equity, or some combination of the two, providing credit to those businesses while also obtaining equity sweeteners like warrants to buy their stock at a future date, or convertible debt. Those equity sweeteners can help Vistara boost its returns if clients later close equity funding or sell at a higher valuation.
“Vistara has built an exceptional team, established a disciplined investment approach, and consistently delivered strong results.”
Ryan Beedie, Beedie Capital
To date, Vistara has raised close to $700 million USD and returned $600 million USD, Garg said. The firm has invested in 46 companies and exited 26, posting a net annualized internal rate of return of approximately 13 to 14 percent. Thus far, the firm has fully returned its first two funds to LPs, has posted a 120-percent-plus return on its third, and is approaching the 100 percent mark on Fund IV. Some of its funds have been ranked top performers in their asset class by market research company Preqin.
Beedie and Garg have been friends for decades and colleagues for more than 15 years: Garg spun Vistara out of a Beedie Capital fund he was running at the time. Beedie Capital has been its biggest LP since then, anchoring all of its funds to date. Garg described Beedie’s latest commitments as “huge,” noting that the family office’s GP stake creates greater alignment and reflects both the trust they have built and the room they see for Vistara to grow from here.
“Over the past decade, Vistara has built an exceptional team, established a disciplined investment approach, and consistently delivered strong results,” Beedie told BetaKit over email. “Our acquisition of a 50-percent stake in the management company and anchoring its new evergreen fund, reflects our confidence in the broader organization and the significant growth opportunity ahead.”
As Vistara gears up to raise and deploy its new fund, the firm has also promoted two longtime investment team members, John O’Donoghue and Neil Kenley, to partner, and hired Jyotin Handa as CFO. Handa previously spent a decade helping fellow Canadian private credit provider Espresso Capital structure and manage its own evergreen funds.
While Vistara could potentially create other new funds in the future, Garg said the firm has no intention of doing that at this time, and may just look to raise additional capital for the Vistara Growth Structured Opportunities Fund.
With the right team, an aligned anchor partner, and a new fund structure in place, Garg said, “The table is now set for growth.”
Feature image courtesy Vistara Growth.