Vista Equity Partners Moves into Healthcare Space with Alegeus Acquisition

Vista Equity Partners will acquire Alegeus, a company which is widely considered to be a leader in the consumer directed healthcare market, from investment funds that are affiliated with Lightyear Capital LLC. The terms of the deal were not disclosed at the time of the announcement.

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Founded in 2000 by Robert F. Smith, Vista Equity Partners prides itself on value-added investments primarily in software, data, and the tech sector. Additional investments include Datto, marketing automation company Marketo, Tibco, Vertafore, and Xactly, among many others.

Vista has offices in Austin, San Francisco, Oakland, and Chicago and more than $31 billion in capital commitments. Today the firm, in conjunction with Vista Consulting Group (VCG), employs 185 investment and operating professionals.

The acquisition represents a departure from the firm’s usual investment strategy, but in a statement released to announce the deal, Vista President Brian Sheth noted that his management team sees tremendous opportunity in the consumer directed healthcare market.

Alegeus was founded in 2012 and deals in various types of consumer directed healthcare solutions, including HSAs, FSAs and HRAs. These types of accounts are gaining importance among both employers and independent consumers who are increasingly becoming financially responsible for funding their healthcare.

Alegeus processes more than $9.1 billion in healthcare payments annually and services more than 40% of benefits account in the market as a whole.

Alegeus leverages technology to deliver its services to 225,000 employers and 30 million consumers. The company has over 300 clients, which includes both larger health insurance plans like American Benefits Group and Employee Plans, LLC, as well as smaller third-party administrators.

The company offers a software platform featuring engagement resources, interactive analytics, payment options, and a banking network to facilitate healthcare decision management.

The breadth and quality of the Alegeus platform’s solutions has won the company numerous awards, including the Silver Digital Health Award, the Mobile Star Award and a CDH Leader of the year award for CEO Steve Auerbach. The company has over 400 employees in Boston, Orlando and Milwaukee.

Lightyear Capital LLC is a New York-based private equity firm that invests primarily in software, data and technology companies that bring change to their industries. The firm acquired Alegeus via its Lightyear Fund III in conjunction with other investors in 2012.