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

By Jan 16, 2013, 12:34 PM Author's Blog  

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

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.

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.

Boston-based Advent International Corp., which 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.

Fee Breaks

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.

By Sabrina Willmer & David Carey

Courtesy of Bloomberg News

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