Veritas Capital Raises $14.4 Billion in Oversubscribed Fund for Government Technology Deals Despite Tough Market Conditions
Veritas Capital Secures $14.4 Billion in Oversubscribed Fund, Signaling Investor Appetite for Government-Tech Plays
Defense and Healthcare Technology Specialist Raises 35% More Than Previous Fund Despite Challenging Market Conditions
Veritas Capital, a New York-based private equity firm specializing in technology investments aligned with government and regulated sectors, announced the final close of its ninth flagship fund at $14.4 billion on September 10, 2025. The fundraise significantly exceeded the firm's initial $13 billion target and represents a 35% increase over its predecessor fund, which closed at $10.7 billion in 2022.
The successful capital raise comes at a time when many private equity firms are struggling to meet fundraising targets, with industry data showing a marked decline in capital commitments across the sector. Veritas's achievement positions the firm among a select group of specialized managers that continue to attract substantial institutional investment despite broader market headwinds.
A Rare Success Story in Turbulent Fundraising Waters
The oversubscription of Fund IX reflects growing institutional investor confidence in Veritas's focused approach to complex, regulated markets. The fund attracted commitments from more than double the number of investors compared to its previous fund, with significant participation from public pension systems across states including New York, Virginia, and Oregon, each contributing between $100 million and $300 million.
"Fund IX represents an important step forward for Veritas, and I'm deeply proud of our team and the enduring partnerships that made this milestone possible," said Ramzi Musallam, Chief Executive Officer and Managing Partner of Veritas Capital. "In one of the most challenging fundraising environments in recent memory, strong demand for Fund IX is a clear endorsement of our strategy and platform."
Global private equity fundraising has seen a significant decline in recent years, highlighting the challenging market conditions that make Veritas's success notable.
| Year | Capital Raised (USD Billions) |
|---|---|
| 2021 | 1,119.00 |
| 2022 | 822.58 |
| 2023 | 784.93 |
| 2024 | 763.94 |
| H1 2025 | 424.58 |
The firm's success can be attributed to its track record of successful exits and operational improvements in portfolio companies. Recent high-profile transactions include Bain Capital's $5.3 billion acquisition of consulting firm Guidehouse and KKR's partial acquisition of healthcare analytics company Cotiviti at an $11 billion valuation.
Strategic Positioning in Critical Infrastructure Modernization
Veritas has built its reputation over 25 years by executing complex corporate carve-outs and transformations in sectors where technology intersects with national security, healthcare delivery, and critical infrastructure. The firm's investment thesis centers on businesses undergoing digital transformation in highly regulated environments where operational expertise and domain knowledge create significant barriers to entry.
A corporate carve-out is a strategic divestiture where a parent company sells a portion of its business, often creating a new, independent entity. This approach is frequently utilized by private equity firms and other investors to unlock value from non-core or underperforming assets.
Industry analysts suggest that Veritas's timing aligns with a secular shift toward digitization of mission-critical systems across government and regulated industries. As artificial intelligence, cybersecurity, and cloud computing reshape how societies operate, the firm's portfolio companies are positioned to benefit from increased federal and state spending on technology modernization.
The fund's institutional investor base expanded internationally, with commitments from European, Asian, and Middle Eastern institutional channels, alongside private wealth arms of major financial institutions. This diversification reflects growing global interest in the intersection of technology and government services.
Part of a Broader Industry Realignment
Veritas's fundraising success is not an isolated phenomenon but part of a broader trend toward specialized investment strategies in regulated sectors. OceanSound Partners recently closed its second fund at nearly $1.5 billion, nearly double its inaugural fund, also focusing on government-linked and regulated businesses. Similarly, America's Frontier Fund, a venture capital firm targeting national security and frontier technologies, raised $315 million for its debut fund with backing from Department of Defense-guaranteed loans.
This pattern suggests that institutional investors are increasingly allocating capital to managers with proven operational capabilities in complex, regulated markets rather than pursuing broader, generalist strategies. Market observers note that this "flight to quality" reflects limited liquidity available to limited partners, concentrating capital among differentiated managers with repeatable value creation playbooks.
The successful raises contrast sharply with industry-wide fundraising challenges. According to recent market data, median private equity fundraising has declined significantly, with many firms struggling to reach initial targets or experiencing extended fundraising periods.
Technology-Driven Value Creation in Government Markets
Veritas's investment approach focuses on businesses that provide essential services to government agencies, healthcare systems, and critical infrastructure operators. The firm typically pursues corporate carve-outs—divisions that larger companies are divesting—and applies operational improvements through technology integration and process optimization.
Recent portfolio developments illustrate this strategy. The firm has invested in companies providing cybersecurity solutions to government contractors, healthcare revenue cycle management platforms, and financial infrastructure software for core banking systems. These investments benefit from stable, long-term customer relationships and recurring revenue models characteristic of government and regulated industry contracts.
Market analysts expect continued consolidation in these sectors as private equity firms seek to aggregate fragmented service providers and technology platforms. The availability of corporate divestitures is expected to increase as public companies focus on core operations and optimize their portfolios in response to challenging market conditions.
Investment Outlook and Market Implications
The successful fundraising by Veritas and similar specialized firms may signal broader institutional investor preferences for defensive growth strategies in uncertain economic times. Government and healthcare technology investments typically offer more predictable cash flows and longer contract durations compared to purely commercial technology plays.
The global Government Technology (GovTech) market is projected to experience steady growth, driven by modernization and digitization initiatives.
| Market/Spending Area | Year | Value/Forecast |
|---|---|---|
| Global GovTech Market Size | 2024 | USD 606 billion - USD 615.59 billion |
| Global GovTech Market Forecast | 2033 | USD 2.305 trillion |
| Global GovTech Market Forecast | 2034 | USD 1.4 trillion |
| US Federal Civilian IT Budget | Fiscal 2025 | USD 76.8 billion |
| US Federal IT Contract Spending | Fiscal 2024 | USD 126 billion |
| US Federal IT Contract Spending Forecast | Fiscal 2025 | ~$130 billion |
| Global Public Sector IT Spending | 2025 | USD 9.22 billion |
Financial advisors suggest that investors may be attracted to the sector's resilience during economic downturns, as government spending on essential services tends to remain stable regardless of broader economic conditions. However, past performance does not guarantee future results, and investors should carefully consider the complexities and regulatory risks associated with government-aligned investments.
The concentration of capital among specialized managers could accelerate consolidation in the government technology sector. With $14.4 billion in committed capital, Veritas is positioned to pursue larger acquisitions and transformative deals that may reshape competitive dynamics in defense technology, healthcare IT, and critical infrastructure.
Market participants anticipate increased competition for high-quality assets in these sectors, potentially driving up valuations and requiring more sophisticated operational improvement strategies to generate attractive returns. The firm's ability to deploy capital effectively over the fund's investment period will determine whether the fundraising success translates into strong returns for investors.
Looking Forward: Deployment Strategy and Market Position
With Fund IX's close, Veritas now manages more than $54 billion in assets under management, strengthening its position as one of the largest private equity firms focused on the intersection of technology and government. The firm has committed $400 million of its own capital to the fund, aligning management incentives with investor returns.
Industry experts expect Veritas to pursue one to two headline acquisitions within the next 18 months, likely focusing on corporate carve-outs in cybersecurity, healthcare technology, or financial infrastructure. The firm's established relationships with investment banks and corporate development teams provide advantageous deal flow access in these specialized markets.
The success of Fund IX reflects broader institutional confidence in the long-term growth prospects of technology-enabled government services and regulated industry transformation. As artificial intelligence and digital technologies continue reshaping critical infrastructure, specialized investment managers with operational expertise in these complex markets are likely to remain attractive to institutional investors seeking defensive growth opportunities.
House Investment Thesis
| Aspect | Summary |
|---|---|
| Core Event | Veritas Capital closes a $14.4B Fund IX, which is not an outlier but emblematic of a bifurcated fundraising market. Capital is concentrating in top-decile, thesis-driven managers while the median GP struggles. |
| Root Causes | 1. Flight to Proven Playbooks: LPs with limited liquidity consolidate capital into managers with a repeatable edge (e.g., carve-outs, software value-creation). 2. Secular Digitization: Mission-critical systems in national security, health, and infrastructure are mid-cycle for modernization (cloud, data, AI, cyber). 3. Secondaries Market: LP- and GP-led secondaries are recycling liquidity, enabling re-ups into desired GPs. 4. Proof Points from Exits: Successful exits (e.g., Veritas's Guidehouse sale) gave LPs cover to over-allocate. |
| Similar Moves (Signals) | • OceanSound ($1.49B): Gov/regulated tech demand below mega-fund scale. • PSG Equity ($8B): LP appetite for focused software specialists. • Haveli ($4.5B): Demand for operator-led software value creation. • General Catalyst (~$8B): Convergence of VC/PE around regulated, system-level change. • Advent/BCI (Maxar): Private markets are comfortable owning sensitive-tech infrastructure. |
| Veritas's Edge & Strategy | Edge: History of regulated domain carve-outs, tight operating playbook, proven exits, and a $400M GP commit. Hunting Grounds: Gov-cloud/cyber, healthcare ops tech, financial-infra software, critical-infra digitization. Value Creation: Focus on EBITDA expansion via contract mix, pricing governance, and ops—not just AI stories. |
| Implications for PE Pros | 1. Origination: Focus on noncore corporate carve-outs with messy transition service agreements (TSAs). 2. Underwriting: Model longer hold periods and pricing power; avoid over-indexing AI without process redesign. 3. Exits: Plan for GP-led continuation vehicles and partial sales as base-case exit paths. 4. Diligence: Account for compliance/geopolitical risks (CFIUS, data residency, budget cycles). 5. Competition: Advantage must come from angle + speed, not just price, against specialists and global platforms. |
| Risks to the Thesis | • Style drift due to deployment pressure. • Policy/budget shocks elongating sales cycles. • Narrowing secondaries window tightening LP liquidity. |
| Predictions | 1. Major carve-outs in U.S. public-sector IT/health IT within 12 months. 2. Gov-tech platform consolidation accelerates. 3. Continuation vehicles normalize as default exits for regulated assets. 4. Return dispersion widens; regulatory ops specialists outperform generalists. 5. LP mix tilts further to sovereigns/private wealth, with larger checks but tougher governance. |
| Bottom Line | This is where the puck is going: scaled capital pursuing regulated, system-level software with operational complexity as the moat. To compete, build an edge in carve-out execution, government sales ops, and continuation-friendly capital structures. |
Investors considering private equity allocations should consult with qualified financial advisors to assess suitability for their investment objectives and risk tolerance.