Cliff Banks - The Banks Report

Robert Smith’s Vista Equity Poised to Become Automotive Retail’s Biggest Player

October 9, 2015 — Earlier this week, Robert Smith, founder of Vista Equity Partners, graced the cover of the Forbes 400 Richest People in America issue, with a reported $2.5 billion in personal wealth. It’s Smith’s first time on the list. He is ranked as the 268th richest person and is the second wealthiest African-American, behind only Oprah Winfrey.

So what, you ask? Well, Mr. Smith’s private equity firm Vista Equity (he is the founder, chairman and CEO) is in the process of making a big play in the automotive retail space. In 2006, Vista Equity, along with Goldman Sachs, helped finance Bob Brockman’s $2.8 billion takeover of Reynolds and Reynolds.

For the next eight years, Vista was a behind-the-scenes financial partner with Reynolds. Following its majority investment in CRM firm Dealersocket in 2014, Vista quietly sold its stake in Reynolds in December of last year.

Vista Equity isn’t being quiet any more. Dealersocket (with Vista’s backing and Jonathan Ord’s leadership) has added several pieces to its portfolio this year (see below) and probably isn’t finished.

  • AutoStar Solutions: DMS for used vehicle and buy-here-pay-here dealerships
  • FEX: DMS for used-car dealers
  • DealerFire: Website company
  • Inventory+: Inventory management tool recently acquired from Dealertrack

Meanwhile, Vista Equity recently announced it has entered into an agreement to acquire Solera Holdings (parent company of Autopoint and DMEautomotive) for $6.5 billion in a deal that should close in the first quarter of 2016.

Vista Equity, which currently has capital commitments of more than $14 billion, has the juice to make some big plays and is one of the top 10 best performing private equity firms with returns of 28%. Last October, it raised its fifth investment fund, attracting a respectable $5.8 billion (Vista originally targeted $3.5 billion).

And it’s close to starting another fund in the next few weeks, according to a report in Bloomberg, which cites sources saying Vista is hoping to raise another $8 billion.

Don’t be surprised if Vista makes a monster play in the automotive space in the next year or so, in addition to its Solera purchase. Smith, along with Vista’s president Brian Sheth, know the automotive retail space and easily could put together a powerhouse in the industry.

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