Silver Lake Partners
Encyclopedia
Silver Lake is a 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
and Instinet
.
Silver Lake operates through three primary businesses, all focused on technology investments:
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
.
to make private equity
investments in mature technology
companies as opposed to the startup
s 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
; 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.
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.
In 2004, McNamee left Silver Lake to found Elevation Partners
, an entertainment and media focused private equity firm, together with Bono
.
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. 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. 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.
In May 2011, Microsoft
agreed to acquire Skype for $8.5 billion in cash. Silver Lake has a major stake in Skype.
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
,AVI-SPL, 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
, UGS Corp, and MultiPlan.
The following table details some of Silver Lake's most notable private equity investments:
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
firm focused on leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
and growth capital
Growth capital
Growth capital is a type of private equity investment, most often a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business.Companies...
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
Avaya
Avaya Inc. is a privately held computer networking, information technology and telecommunications company that is a global provider of business communications systems. The international head quarters is in Basking Ridge, New Jersey, United States...
, Sabre Holdings
Sabre Holdings
Sabre Holdings or Sabre, Inc. is an American privately held travel technology company, encompassing several brands in three global distribution system channels: travel agency, airline, and direct to consumer. These areas are serviced by TSG's three main business groups...
, UGS Corp., Skype
Skype
Skype is a software application that allows users to make voice and video calls and chat over the Internet. Calls to other users within the Skype service are free, while calls to both traditional landline telephones and mobile phones can be made for a fee using a debit-based user account system...
, Seagate Technology
Seagate Technology
Seagate Technology is one of the world's largest manufacturers of hard disk drives. Incorporated in 1978 as Shugart Technology, Seagate is currently incorporated in Dublin, Ireland and has its principal executive offices in Scotts Valley, California, United States.-1970s:On November 1, 1979...
and Instinet
Instinet
Instinet is an institutional, agency-only broker. As such, it executes trades for roughly 1,500 “buyside” clients such as asset management firms, hedge funds, insurance companies, mutual funds and pension funds...
.
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 HutchinsGlenn HutchinsGlenn Hutchins is a private equity investor focused on the technology sector and co-founder of Silver Lake Partners, a $13 billion private equity firm.-Career:...
, Dave Roux and Jim Davidson and comprises the bulk of the firm's assets under managementAssets under managementAssets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
.
- Silver Lake Sumeru – focuses on technology investments in middle-market companies. The SumeruSumeruSumeru or Sineru is the name of the central world-mountain in Buddhist cosmology. Etymologically, the proper name of the mountain is Meru , to which is added the approbatory prefix su-, resulting in the meaning "excellent Meru" or "wonderful Meru".The concept of Sumeru is closely related to the...
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
Sand Hill Road
Sand Hill Road is a road in Menlo Park, California, notable for its concentration of venture capital companies. Its significance as a symbol of private equity in the United States may be compared to that of Wall Street in the stock market...
in Menlo Park, California
Menlo Park, California
Menlo Park, California is a city at the eastern edge of San Mateo County, in the San Francisco Bay Area of California, in the United States. It is bordered by San Francisco Bay on the north and east; East Palo Alto, Palo Alto, and Stanford to the south; Atherton, North Fair Oaks, and Redwood City...
has a global presence with over 75 investment professionals across offices in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
.
History
Silver Lake was founded in 1999, at the height of the late 1990s technology boomDot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
to make private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
investments in mature technology
Mature technology
A mature technology is a technology that has been in use for long enough that most of its initial faults and inherent problems have been removed or reduced by further development...
companies as opposed to the startup
Startup company
A startup company or startup is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets...
s pursued actively by venture capitalists. Among the firm's founders were Glenn Hutchins
Glenn Hutchins
Glenn Hutchins is a private equity investor focused on the technology sector and co-founder of Silver Lake Partners, a $13 billion private equity firm.-Career:...
, 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
Thomas H. Lee Partners
Thomas H. Lee Partners is a private equity firm based in Boston, Massachusetts specializing in leveraged buyouts, growth capital, special situations, industry consolidations, and recapitalizations....
; David Roux who had an operational and entrepreneurial background having served as Chairman and CEO of Liberate Technologies, executive vice president at Oracle Corporation
Oracle Corporation
Oracle Corporation is an American multinational computer technology corporation that specializes in developing and marketing hardware systems and enterprise software products – particularly database management systems...
and senior vice president at Lotus Development; Jim Davidson who had led the Technology Investment Banking business at Hambrecht & Quist
Hambrecht & Quist
Hambrecht & Quist was an investment bank based in San Francisco, California noted for its focus on the technology and internet sectors. H&Q was founded by William Hambrecht and George Quist in California, 1968....
and Roger McNamee
Roger McNamee
Roger McNamee is a founding partner of the venture capital firm Elevation Partners. Prior to co-founding the firm McNamee co-founded private equity firm Silver Lake Partners and headed the T...
, 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.
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.
In 2004, McNamee left Silver Lake to found Elevation Partners
Elevation Partners
Elevation Partners is an American private equity firm that invests in intellectual property and media and entertainment companies. The firm has $1.9 billion of assets under management....
, an entertainment and media focused private equity firm, together with Bono
Bono
Paul David Hewson , most commonly known by his stage name Bono , is an Irish singer, musician, and humanitarian best known for being the main vocalist of the Dublin-based rock band U2. Bono was born and raised in Dublin, Ireland, and attended Mount Temple Comprehensive School where he met his...
.
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. 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. 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
Wells Fargo
Wells Fargo & Company is an American multinational diversified financial services company with operations around the world. Wells Fargo is the fourth largest bank in the U.S. by assets and the largest bank by market capitalization. Wells Fargo is the second largest bank in deposits, home...
.
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
CalPERS
The California Public Employees' Retirement System or CalPERS is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families"...
for $275 million, implying a valuation of approximately $2.8 billion for the firm.
In May 2011, Microsoft
Microsoft
Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...
agreed to acquire Skype for $8.5 billion in cash. Silver Lake has a major stake in Skype.
Investments
Since inception in 1999, Silver Lake has made substantial investments through leveraged buyoutLeveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
transactions, minority growth investments
Growth capital
Growth capital is a type of private equity investment, most often a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business.Companies...
and PIPE investments
Private investment in public equity
A private investment in public equity, often called a PIPE deal, involves the selling of publicly traded common shares or some form of preferred stock or convertible security to private investors. In the U.S...
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
Avago Technologies
Avago Technologies is an American company which was earlier the semiconductor products division of HP and later Agilent Technologies, before being spun off into a distinct legal entity. It holds more than 5,000 patents.- Products:...
,AVI-SPL, Business Objects, Flextronics
Flextronics
Flextronics International Ltd. is an electronics manufacturing services provider that offers services to original equipment manufacturers . It also provides supporting supply chain services, including packaging and transportation throughout the world, as well as design and after-sales...
, Gartner
Gartner
Gartner, Inc. is an information technology research and advisory firm headquartered in Stamford, Connecticut, United States. It was known as GartnerGroup until 2001....
, Instinet
Instinet
Instinet is an institutional, agency-only broker. As such, it executes trades for roughly 1,500 “buyside” clients such as asset management firms, hedge funds, insurance companies, mutual funds and pension funds...
, IPC Systems, MCI, Inc., NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
, Network General
Network General
NetScout Systems, Inc. is a provider of integrated network performance management solutions. NetScout is known for their packet Sniffer and nGenius packet flow recorder products. It is headquartered in Westford, Massachusetts and has approximately 800 employees in offices across the globe...
, NXP Semiconductors, Sabre Holdings
Sabre Holdings
Sabre Holdings or Sabre, Inc. is an American privately held travel technology company, encompassing several brands in three global distribution system channels: travel agency, airline, and direct to consumer. These areas are serviced by TSG's three main business groups...
, Seagate Technology
Seagate Technology
Seagate Technology is one of the world's largest manufacturers of hard disk drives. Incorporated in 1978 as Shugart Technology, Seagate is currently incorporated in Dublin, Ireland and has its principal executive offices in Scotts Valley, California, United States.-1970s:On November 1, 1979...
, Serena Software
Serena Software
Serena Software Inc is US-based software company.Serena develops and markets products focused on managing change across information technology environments...
, SunGard Data Systems, Thomson SA
Thomson SA
Technicolor SA , formerly Thomson SA and Thomson Multimedia, is a French international provider of solutions for the creation, management, post-production, delivery and access of video, for the Communication, Media and Entertainment industries. Technicolor’s headquarters are located in Issy les...
, UGS Corp, and MultiPlan.
The following table details some of Silver Lake's most notable private equity investments:
| Investment | Year | Company Description | Ref. |
| Skype Skype Skype is a software application that allows users to make voice and video calls and chat over the Internet. Calls to other users within the Skype service are free, while calls to both traditional landline telephones and mobile phones can be made for a fee using a debit-based user account system... |
2009 | Silver Lake, Andreessen Horowitz Andreessen Horowitz Andreessen Horowitz is a venture capital firm founded by Marc Andreessen and Ben Horowitz. The company's headquarters is in Menlo Park, California.The venture capital fund was started in June 2009 with an initial capital of $300 million.... and the Canada Pension Plan Investment Board announce the acquisition of 65% of Skype Skype Skype is a software application that allows users to make voice and video calls and chat over the Internet. Calls to other users within the Skype service are free, while calls to both traditional landline telephones and mobile phones can be made for a fee using a debit-based user account system... for $1.9 billion from E-Bay, valuing the business at $2.75 billion |
|
| Avaya Avaya Avaya Inc. is a privately held computer networking, information technology and telecommunications company that is a global provider of business communications systems. The international head quarters is in Basking Ridge, New Jersey, United States... |
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 Lucent Technologies Alcatel-Lucent USA, Inc., originally Lucent Technologies, Inc. is a French-owned technology company composed of what was formerly AT&T Technologies, which included Western Electric and Bell Labs... |
|
| Sabre Holdings Sabre Holdings Sabre Holdings or Sabre, Inc. is an American privately held travel technology company, encompassing several brands in three global distribution system channels: travel agency, airline, and direct to consumer. These areas are serviced by TSG's three main business groups... |
2006 | Silver Lake and TPG Capital announced a deal to buy Sabre Holdings Sabre Holdings Sabre Holdings or Sabre, Inc. is an American privately held travel technology company, encompassing several brands in three global distribution system channels: travel agency, airline, and direct to consumer. These areas are serviced by TSG's three main business groups... , which operates Travelocity Travelocity Travelocity is an online travel agency and wholly owned subsidiary of Sabre Holdings Corporation, which was a publicly traded company until taken private by Silver Lake Partners and Texas Pacific Group in March 2007... , Sabre Travel Network Sabre Travel Network Sabre Travel Network is the line of technology developed by Sabre Inc. that services travel agencies directly. Sabre Travel Network began when the Sabre Computer reservations system was installed in Briarcliff Manor, New York in 1960. It began as the reservations system for American Airlines... and Sabre Airline Solutions Sabre Airline Solutions Sabre Airline Solutions is a subsidiary of Sabre Holdings. The main product of Sabre Airline Solutions is the SabreSonic system. This provides departure control, reservations, and, inventory management. Other products include resource management, fares and revenue management, data services,... , 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 Travelport Travelport is a broad-based business services company and a leading provider of critical transaction processing solutions to companies operating in the global travel industry... . |
|
| NXP Semiconductors | 2006 | In August 2006, a consortium Club deal A club deal, in finance, refers to a leveraged buyout or other private equity investment that involves several different private equity investment firms. Club deal can also be referred as syndicated investment.... of Silver Lake, Kohlberg Kravis Roberts and AlpInvest Partners AlpInvest Partners AlpInvest Partners is a private equity investment manager and at the end of 2009 globally managed over €42 billion .... acquired a controlling 80.1% share of semiconductors unit of Philips Philips Koninklijke Philips Electronics N.V. , more commonly known as Philips, is a multinational Dutch electronics company.... for €6.4 billion. The new company, based in the Netherlands, was renamed NXP Semiconductors. |
|
| SunGard SunGard SunGard is a multinational company based in Wayne, Pennsylvania, which provides software and services to education, financial services, and public sector organizations. It was formed in 1983, as a spin-off of the computer services division of Sun Oil Company, during a period of low crude oil... |
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 Bain Capital Bain Capital LLC is a Boston-based private equity firm founded in 1984 by partners from the consulting firm Bain & Company. Originally conceived as an early-stage, growth-oriented investment fund, Bain Capital today manages approximately $65 billion in assets, and its strategies include private... , the Blackstone Group Blackstone Group The Blackstone Group L.P. is an American-based alternative asset management and financial services company that specializes in private equity, real estate, and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions ,... , Goldman Sachs Capital Partners Goldman Sachs Capital Partners Goldman Sachs Capital Partners is the private equity arm of Goldman Sachs, focused on leveraged buyout and growth capital investments globally.... , Kohlberg Kravis Roberts, Providence Equity Partners Providence Equity Partners Providence Equity Partners is a global private equity investment firm focused on media, entertainment, communications and information investments... , and Texas Pacific Group Texas Pacific Group TPG Capital is one of the largest private equity investment firms globally, focused on leveraged buyout, growth capital and leveraged recapitalization investments in distressed companies and turnaround situations. TPG also manages investment funds specializing in growth capital, venture capital,... . This represented the largest leveraged buyout completed since the takeover of RJR Nabisco RJR Nabisco RJR Nabisco, Inc., was an American conglomerate formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. RJR Nabisco was purchased in 1988 by Kohlberg Kravis Roberts & Co... 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 Freescale Semiconductor Freescale Semiconductor, Inc. is a producer and designer of embedded hardware, with 17 billion semiconductor chips in use around the world. The company focuses on the automotive, consumer, industrial and networking markets with its product portfolio including microprocessors, microcontrollers,... . 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. |
|
| Avago Technologies Avago Technologies Avago Technologies is an American company which was earlier the semiconductor products division of HP and later Agilent Technologies, before being spun off into a distinct legal entity. It holds more than 5,000 patents.- Products:... |
2005 | In 2005, the semiconductor division of Agilent was acquired by Silver Lake and Kohlberg Kravis Roberts, to form Avago Technologies Avago Technologies Avago Technologies is an American company which was earlier the semiconductor products division of HP and later Agilent Technologies, before being spun off into a distinct legal entity. It holds more than 5,000 patents.- Products:... , one of the largest privately held semiconductor companies in the world. In 2009, Avago completed a $650 million initial public offering. |
External links
- Silver Lake (company website)