Vista starts $250M distressed software fund

Vista is setting up a $250 million pool to buy loans and bonds from software companies after prices fell hard in early 2026. The bet is that panic around artificial intelligence pushed some debt lower than the underlying businesses deserve. (bloomberg.com) This is not the usual private equity move of buying a whole company. It is closer to buying a neighbor’s mortgage at a discount and waiting to collect the payments, or taking control if the borrower stumbles. (bloomberg.com) The opening came from a sharp repricing in software credit. Software loans make up about 12% of the Bloomberg United States Leveraged Loan Index, and that sector became the worst performer in collateralized loan obligation portfolios as investors started worrying that artificial intelligence could weaken old software business models. (pymnts.com) Another estimate put software at roughly $235 billion of loans, or about 16% of the $1.5 trillion United States leveraged loan market. That matters because even a small drop in prices can create a very large pile of debt for funds like Vista to shop through. (am.landg.us.com) The fear is simple: many software companies were financed when revenue growth looked steady and interest rates were lower. If customers now expect artificial intelligence features faster than those companies can deliver, lenders start asking whether yesterday’s cash-flow forecasts still work. (cnbc.com) That pressure has already shown up in both public and private debt. Bloomberg reported earlier in February that companies such as McAfee, ION, Rackspace, and Team.Blue were all signs that software credit was under strain as refinancing got harder and prices fell. (advisorperspectives.com) Vista is not a random tourist stepping into that mess. The firm says it has spent 25 years focused on enterprise software, completed more than 650 transactions, and runs both private equity and private credit strategies. (vistaequitypartners.com) That specialization is the whole edge. A generalist distressed fund sees a loan trading at 92 cents on the dollar; Vista is betting it can tell the difference between a software company that is temporarily out of favor and one that artificial intelligence is actually making obsolete. (vistaequitypartners.com) The fund is also small enough to be tactical. At $250 million, it does not need to rescue the whole sector; it only needs a handful of loans where forced sellers want out now and Vista thinks the repayment odds are better than the market price implies. (bloomberg.com) If the selloff keeps spreading, Vista could end up doing more than clipping interest payments. In distressed debt, the lender who buys cheap paper today can become the owner, or at least the power broker, when a software company has to renegotiate tomorrow. (bloomberg.com)