Vista Equity president David Breach sees early signs of relief in IPO bottleneck

(Bloomberg) –Vista Equity Partners’ David Breach flagged early indications that the bottleneck for initial public offerings could ease by year-end, giving tech buyout firms more exit options.

“The IPO market is still shut. It’s showing some very, very early signs of opening up but I think it’s still premature,” Breach, the private equity firm’s president and chief operating officer, told Bloomberg TV during the SuperReturn International conference in Berlin. “Our best guess is that toward the end of the year we should see the IPO market open up more robustly and you know we’ll look at it as that happens.”

Investors are waiting for candidates to unfreeze the tech IPO market led by chip designer Arm Ltd., which could raise as much as $10 billion later this year.

Vista has taken several portfolio companies public over the past few years including Integral Ad Science Holding Corp. and JAMF Holding Corp., as well as companies that later got taken private such as Ping Identity Holding Corp. and Datto Holding Corp. 

Breach sees a mild recession on the horizon. But a potential economic downturn hasn’t affected how Vista is underwriting new investments given its conservative approach, he said. The former Kirkland & Ellis lawyer still anticipates the firm will complete two to three more deals before 2024.

“We’re in a different market now as valuations have adjusted and multiples have re-rated,” he said. “The public markets are a really attractive area to invest in and the last few transactions we have been buying really terrific companies that we’ve been able to take private to help them with their transformation in a private context.”

Austin-based Vista bought insurance technology provider Duck Creek Technologies Inc. earlier this year. 

The private equity firm is fundraising for the eighth iteration of its flagship fund. It’s the largest yet with a target of $20 billion. 

“We’re very happy with how our fundraising is progressing,” Breach said. “Our investors really appreciate the discipline that we’ve shown.”