Institutional investors lost almost $3bn through equity co-investments in Thoma Bravo's failed buyout bet on Medallia, according to 9fin sources and documents.
Of the roughly $5.1bn of equity lost in Medallia’s restructuring — the largest in private credit history — Thoma Bravo’s write-down was closer to $2bn, with the remainder coming from co-invest positions, according to a source familiar with the matter. California’s public retirement system, CalPERS, lost over a hundred million on its co-investment in the beleaguered software platform, while Abu Dhabi’s sovereign wealth fund, Mubadala Investment Co, lost hundreds of millions, sources and public documents say.
Co-investment strategies have risen in popularity in recent years as limited partners look to boost both equity and credit returns, but the equity loss from limited partners who participated in the Medallia blunder shows that the strategy, which dramatically increases exposure to a single asset, carries significant risk.
“This is a reminder that even the best private equity firms are going to stub their toe every once in a while,” one public pension investment officer specializing in private markets told 9fin.
Alongside CalPERS and Mubadala, other equity co-investors included San Francisco Employees’ Retirement Systemand a fund...
