Vistex Raises $65M From Accel-KKR As It Readies An IPO

Vistex, the Chicago software company, raised $65 million via a minority equity investment by Accel-KKR, the technology-focused private equity firm. Under the terms of the deal, Accel-KKR could invest an additional $40 million. The investment marks the first time in Vistex’s twenty year history that it turned to outside investors to shore up capital.

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When announcing the investment in late January, Vistex said the funding will go to bankroll strategic acquisitions to expand its cloud offerings.  Vistex is currently focused on moving its products to the cloud and offering a subscription-based model rather than selling annual licenses.  The funding will also go to support hiring in sales, marketing, and engineering, with the company aiming to tap talent from nearby colleges and universities.

To lure talent its way, Vistex plans to open a satellite office in downtown Chicago. It has an 80,000 square foot office in a suburb of Chicago but the move to the city is part of its efforts to appeal to younger workers. Vistex opted to go with Accel-KKR for its first outside investment because it was looking for a partner that could provide capital and the expertise in building and growing cloud businesses.

For Vistex, Accel-KKR, which has $4 billion in committed capital in buyout and growth capital investment funds, it gets a partner with deep knowledge and experience in the cloud market. The famed PE firm has invested in more than 100 companies since its inception some fifteen years ago, making it one of the most active PE firms in the software and tech markets. "We are excited about partnering with Vistex to build on their past success and deliver more value to their customers, partners, and employees," said Greg Williams, Managing Director at Accel-KKR said when Vistex announced the funding.

The Chicago software company, which makes software that helps the likes of Apple, General Motors and Sony price their products and determine incentives for customers and distributors, launched in 1999 and now has twenty offices across the globe, 1,500 employees and close to $250 million in revenue for 2018.

"This is the first equity capital raise in the history of the company. It is unprecedented for an enterprise software company to grow to a size and scale like Vistex without any external capital," said Sanjay Shah, who founded Vistex in early 1999 and has been the Chief Architect and CEO since its inception in a press release. "This infusion will provide us with the opportunity to further expand Vistex into new markets, conduct strategic acquisitions in new technologies and increase R&D efforts in AI and other capabilities."

In an interview with Crain’s Chicago Business, Shah said the first outside funding for the software company will pave the way for Vistex to eventually become a publicly traded company. The executive wouldn’t provide a timeline for a potential IPO, saying only he sees the investment as a “stepping stone” that “validates and establishes our presence.”