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Silver Lake
Type Private, Limited liability company
Founded 1999
Founder(s) James Davidson, Glenn Hutchins, Roger McNamee, David Roux
Headquarters United States Menlo Park, California
Industry Private equity, Technology
Products Leveraged buyout, Growth capital
Total assets $13 billion
Employees 75+[1]
Website www.silverlake.com

Silver Lake is an US-based private equity firm focused on leveraged buyout and growth capital investments in technology, technology-enabled and related industries. Founded in 1999, the firm is a leading investment firm in the technology sector and among its most notable investments are Avaya, Sabre Holdings, UGS Corp., Skype, Seagate Technology[2] and Instinet.

Silver Lake operates through three primary businesses, all focused on technology investments:

  • Silver Lake Partners make private equity investments in large cap technology companies. Silver Lake Partners was the firm's original business founded by Glenn Hutchins, Dave Roux and Jim Davidson and comprises the bulk of the firm's assets under management.
  • Silver Lake Sumeru – focuses on technology investments in middle-market companies. The Sumeru business was formerly known as Shah Capital founded by Ajay Shah.
  • Silver Lake Financial a credit focused business invests in distressed debt securities in companies in the technology sector.

The firm, which is headquartered on Sand Hill Road in Menlo Park, California has a global presence with over 75 investment professionals across offices in New York City, London and Hong Kong.

Contents

History

History of private equity
and venture capital
Objectivist.jpg

Early History
(Origins of modern private equity)

The 1980s
(LBO boom)

The 1990s
(LBO bust and the VC bubble)

The 2000s
(Dot-com bubble to the Credit crunch)

  

Silver Lake was founded in 1999, at the height of the late 1990s technology boom to make private equity investments in mature technology companies as opposed to the startups pursued actively by venture capitalists. Among the firm's founders were Glenn Hutchins, who came from The Blackstone Group and served as a Special Advisor on economic and healthcare policy in the early Clinton Administration and previously worked at Thomas H. Lee Partners[3]; David Roux who had an operational and entrepreneurial background having served as Chairman and CEO of Liberate Technologies, executive vice president at Oracle Corporation and senior vice president at Lotus Development; Jim Davidson who had led the Technology Investment Banking business at Hambrecht & Quist and Roger McNamee, who had previously co-founded Integral Capital Partners, a hybrid investment fund that made investments in publicly traded companies and venture capital investments in early stage startups.[3]

The firm raised its first fund, Silver Lake Partners, with $2.3 billion of investor commitments. Silver Lake's first fund was among the best performing funds of its vintage.

The firm's second fund, Silver Lake Partners II was raised in 2004 with $3.6 billion of commitments.[4]

In 2004, McNamee left Silver Lake to found Elevation Partners, an entertainment and media focused private equity firm, together with Bono.[5]

In November 2006, Silver Lake began fundraising for its third fund Silver Lake Partners III, which ultimately collected $9.6 billion of capital from investors, completing fundraising in late 2007.[6] Also in 2007, the firm launched its middle-market investment business, Silver Lake Sumeru, hiring Ajay Shah and the former investment team of Shah Capital Partners. Sumeru completed fundraising for its debut fund in 2008 with $1.1 billion of capital.[7] Silver Lake also launched its credit focused business, Silver Lake Financial in 2007. Silver Lake Financial is headed by Roger Wittlin, who joined the firm together with a group of professionals from Sutter Credit Strategies, a division of Wells Fargo.

On December 20, 2007 Cisco Systems Inc.'s Development Chief, Charles Giancarlo, announced his departure from Cisco and his new position as partner and managing director at Silver Lake.

In January 2008, as the mid-2000s buyout boom was coming to an end, Silver Lake sold a 9.9% stake in its management company to CalPERS for $275 million, implying a valuation of approximately $2.8 billion for the firm.[8]

Investments

Since inception in 1999, Silver Lake has made substantial investments through leveraged buyout transactions, minority growth investments and PIPE investments in over 40 companies.

Silver Lake's current and realized portfolio of investments includes or has included technology industry leaders such as Ameritrade, Avago Technologies, Business Objects, Flextronics, Gartner, Instinet, IPC Systems, MCI, Inc., NASDAQ, Network General, NXP Semiconductors, Sabre Holdings, Seagate Technology, Serena Software, SunGard Data Systems, Thomson SA and UGS Corp.

The following table details some of Silver Lake's most notable private equity investments:

Investment Year Company Description Ref.
Skype 2009 Silver Lake, Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board announce the acquisition of 65% of Skype for $1.9 billion from E-Bay, valuing the business at $2.75 billion [9][10]
Avaya 2007 Silver Lake and TPG Capital completed an $8.2 billion leveraged buyout of the enterprise telephony and call center technology company that was formerly a unit of Lucent Technologies [11]
Sabre Holdings 2006 Silver Lake and TPG Capital announced a deal to buy Sabre Holdings, which operates Travelocity, Sabre Travel Network and Sabre Airline Solutions, for approximately $4.3 billion in cash, plus the assumption of $550 million in debt. Earlier in the year, Blackstone acquired Sabre's chief competitor Travelport. [12]
NXP Semiconductors 2006 In August 2006, a consortium of Silver Lake, Kohlberg Kravis Roberts and AlpInvest Partners acquired a controlling 80.1% share of semiconductors unit of Philips for €6.4 billion. The new company, based in the Netherlands, was renamed NXP Semiconductors. [13][14]
SunGard 2006 SunGard was acquired by a consortium of seven private equity investment firms in a transaction valued at $11.3 billion. The partners in the acquisition were Silver Lake, which led the deal as well as Bain Capital, the Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts, Providence Equity Partners, and Texas Pacific Group. This represented the largest leveraged buyout completed since the takeover of RJR Nabisco at the end of the 1980s leveraged buyout boom. Also, at the time of its announcement, SunGard would be the largest buyout of a technology company in history, a distinction it would cede to the buyout of Freescale Semiconductor. The SunGard transaction is also notable in the number of firms involved in the transaction. The involvement of seven firms in the consortium was criticized by investors in private equity who considered cross-holdings among firms to be generally unattractive. [15]
Avago Technologies 2005 In 2005, the semiconductor division of Agilent was acquired by Silver Lake and Kohlberg Kravis Roberts, to form Avago Technologies, one of the largest privately held semiconductor companies in the world. In 2009, Avago completed a $650 million initial public offering. [16]

[17][18]

References

  1. ^ Investment professionals as of 2009
  2. ^ Seagate to Be Taken Private in Intricate Buyout. New York Times, March 30, 2000
  3. ^ a b Wall Street's New Alchemist (Glenn Hutchins Profile). BusinessWeek, August 8, 2005
  4. ^ Silver Lake Partners closes $3.6bn private equity fund. AltAssets, April 13, 2004
  5. ^ Bono Riffs on Silicon Valley Buyouts With Video Games, Forbes. Bloomberg, January 23, 2005
  6. ^ Silver Lake to Raise $10 Billion for Technology Fund. February 6, 2007
  7. ^ Silver Lake Sumeru closes on $1.1bn. AltAssets, May 7, 2008
  8. ^ Sorkin, Andrew Ross. "California Pension Fund Expected to Take Big Stake in Silver Lake, at $275 Million." New York Times, January 9, 2008
  9. ^ EBay to Sell 65 Percent Of Skype For $1.9 Billion. New York Times, September 1, 2009
  10. ^ eBay Inc. Signs Definitive Agreement to Sell Skype in Deal Valuing Communications Business at $2.75 Billion
  11. ^ Investment Firms Pick Up Avaya For $8.2 Billion
  12. ^ Sorkin, Andrew Ross. "2 Firms Pay $4.3 Billion for Sabre." New York Times, December 12, 2006.
  13. ^ Bloomberg News (2006-08-04). "Technology; Royal Philips Sells Unit for $4.4 Billion". New York Times. http://www.nytimes.com/2006/08/04/business/worldbusiness/04chip.html. Retrieved 2008-04-27.  
  14. ^ KKR in deal to buy Philips Semiconductors. Forbes, August 2, 2006
  15. ^ "Capital Firms Agree to Buy SunGard Data in Cash Deal." Bloomberg L.P., March 29, 2005
  16. ^ "Avago files for $400m IPO". 2008-08-28. http://compoundsemiconductor.net/cws/article/news/35575.  
  17. ^ Avago Tech. (AVGO) Sees IPO Price of $13-$15. Street Insider, July 27, 2009
  18. ^ Avago Technologies Limited Prices Initial Public Offering. MSN Money, August 5, 2009

External links

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