Bloomberg News

Silver Lake Said to Gather More Than $7 Billion for Fund

January 16, 2013

Silver Lake Said to Gather More Than $7 Billion for Latest Fund

Silver Lake, the largest technology-focused private-equity manager, is among investors in talks with Dell about taking the company private, people familiar with the matter told Bloomberg News this week. Photographer: David Paul Morris/Bloomberg

Silver Lake Management LLC, the private-equity firm said to be discussing a potential buyout of computer maker Dell Inc. (DELL:US), has raised more than $7 billion for its latest fund, according to two people briefed on the matter.

The fund, which officially started gathering money in March, had raised $4.1 billion as of August, meaning Silver Lake won about $3 billion since then. Silver Lake Partners IV LP is seeking $7.5 billion, with the option of raising as much as $10 billion.

Silver Lake, the largest technology-focused private-equity manager, is among investors in talks with Dell about taking the company private, people familiar with the matter told Bloomberg News this week. A deal could require buyers to put together about $22 billion in debt and equity financing, the most for a leveraged buyout since 2007. Dell founder Michael Dell was an investor in Silver Lake’s first fund.

“By raising a fund of this size Silver Lake can contemplate a deal the size of Dell, though it will still need to create a syndicate with other funds or large co-investors to do it,” said Kelly DePonte, a partner at Probitas Partners LLC in San Francisco, which raises money for alternative-investment firms.

Gordon Goldstein, a spokesman for Menlo Park, California- based Silver Lake, declined to comment on the fund. The people with knowledge of the fundraising asked not to be named because the information is private.

Advent, Warburg

Silver Lake, founded by Glenn Hutchins, David Roux and Jim Davidson, is the largest technology-focused private-equity manager, with about $14 billion in assets under management. It is one of the few large buyout firms still able to amass billions relatively quickly.

Advent International Corp., the Boston-based firm that began raising money the same month, closed its latest fund at 8.5 billion euros ($11.3 billion) in November. Warburg Pincus LLC, based in New York, closed on $6.4 billion in November, more than halfway to its goal, after entering the market in September 2011.

Like many of its peers, Silver Lake is offering management- fee breaks to clients that make large commitments to the new fund, according to a marketing document sent to prospective investors last year.

The predecessor fund, Silver Lake Partners III LP, was generating an 18 percent net internal rate of return and a multiple of 1.5 times invested capital as of June 30, according to data from California Public Employees’ Retirement System, a limited partner. Skype Technologies SA, an investment in the third fund, generated a more than threefold profit for clients when the video-chat company was sold to Microsoft Corp. in 2011.

The firm’s strongest returns came from its $2.3 billion debut fund from 1999, Silver Lake Partners LP, which was producing a 25 percent IRR and a 2.3 multiple as of midyear, according to the Calpers data.

To contact the reporters on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net; David Carey in New York at dcarey13@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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