Silver Lake (investment firm)

Silver Lake is a global private equity firm focused on investments in technology, technology-enabled and related industries. Founded in 1999, the firm is one of the largest technology investors in the world. Its investment holdings have included Airbnb, Alibaba Group, Ancestry.com, Broadcom, Credit Karma, City Football Group, Dell Technologies, Endeavor, Expedia Group, Fanatics, First Advantage, Global Blue, GoDaddy, Jio, Lightbox, Motorola Solutions, NortonLifeLock, Red Ventures, Sabre Corporation, Skype, SoFi, GLG, Seagate Technology, SolarWinds, TEG, Twitter, Unity, Waymo, Weld North Education, WP Engine, Vacasa and ZPG. Silver Lake is headquartered in Silicon Valley, and has offices in New York, London, and Hong Kong.

Silver Lake Technology Management, L.L.C.

Type	Private, Registered investment adviser
Industry	Private equity
Founded	1999
Founder	Jim Davidson, David Roux, Roger McNamee, Glenn Hutchins
Headquarters	Menlo Park, California, United States
Number of locations	Multiple offices in 3 countries
Key people	Mike Bingle Egon Durban Ken Hao Greg Mondre Joe Osnoss
Products	Investment funds
AUM	US$60 billion (2020)[1]
Website	www.silverlake.com

Investment strategies

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

• Silver Lake Partners makes private equity investments in large-cap technology and tech-enabled companies. Silver Lake Partners comprises the bulk of the firm's assets under management.[2][3]
• Silver Lake Alpine provides structured equity and debt investments in technology and technology-enabled companies.
• Silver Lake Waterman provides growth capital, via a proprietary growth debt product, to later-stage growth companies in technology and technology-enabled industries.[4]

History

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 [5] Jim Davidson who had led the Technology Investment Banking business at Hambrecht & Quist; 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; Roger McNamee, as the representative of Integral Capital Partners, a hybrid investment fund that made investments in publicly traded companies and venture capital investments in early-stage startups; and Glenn Hutchins, who came from 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.[6]

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.[7]

The firm's third fund, Silver Lake Partners III was raised in 2007 with $9.6 billion of commitments.[8] Also in 2007, the firm launched a 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.[9]

In 2011, Silver Lake Kraftwerk was launched to provide growth capital to later-stage companies in technology and tech-enabled businesses across the operations, energy, and resources industries.[10]

In 2013, the firm raised its fourth fund, Silver Lake Partners IV, which closed in 2013 with $10.3 billion in committed capital.

In 2017, the firm raised its fifth fund, Silver Lake Partners V, which closed at $15 billion of commitments. With the launching of this fund, Jim Davidson retired from the Managing Partner committee.[10]

In December 2019, Silver Lake appointed Egon Durban and Greg Mondre as Co-CEOs of Silver Lake and promoted Joe Osnoss to Managing Partner. Silver Lake also announced that Ken Hao will serve as Chairman and Mike Bingle is transitioning to Vice Chairman and Managing Partner Emeritus, with the launch of Silver Lake Partners VI.[11]

In September 2020, it was announced that Silver Lake was having negotiations to invest over $1 billion in Indian retail company Reliance Retail.[12]

Key personnel

The firm is led by Managing Partners and Co-CEOs Egon Durban and Greg Mondre, Chairman Ken Hao, Managing Partner Joe Osnoss, and Mike Bingle, who has announced that he is transitioning to Vice Chairman and Managing Partner Emeritus, with the launch of Silver Lake Partners VI.[13]

Investments

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

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

Investment	Year	Company description	Reference
Expedia Group	2020	On April 23, 2020, Silver Lake and Apollo Global Management, Inc. anchored Expedia Group’s $3.2 billion new capital raising.	[14]
Airbnb	2020	On April 6, 2020, Silver Lake and Sixth Street Partners invested $1 billion in online homestay marketplace Airbnb.	[15]
Twitter	2020	On March 9, 2020, Silver Lake made a $1 billion investment in the social platform Twitter.	[16]
Waymo	2020	On March 2, 2020, Silver Lake led the self-driving car manufacturer, Waymo’s first external investment round.	[17]
City Football Group	2019	On November 27, 2019, Silver Lake announced a definitive agreement to make a $500 million equity investment in City Football Group.	[18]
Verily	2019	On January 3, 2019, Silver Lake led a $1 billion investment round in Verily, Alphabet’s life sciences research and engineering organization.	[19]
ServiceMax	2018	On December 13th, 2018, GE Digital announced its intention to sell the majority of ServiceMax to Silver Lake Partners, while retaining a minority stake of 10% in the future of the company.	[20]
AMC	2018	On September 14, 2018, Silver Lake Alpine invested $600 million in AMC Entertainment, the global film exhibition company.	[21]
Credit Karma	2018	On March 28, Silver Lake made a $500 million secondary investment in Credit Karma, the personal finance company.	[22]
Blackhawk Network	2018	On January 16, 2018, Silver Lake and P2 Capital Partners purchased Blackhawk Network, a company offering prepaid gift, reward and incentive technologies and solutions.	[23]
WP Engine	2018	On January 4, 2018, Silver Lake invested $250 million in WP Engine, a WordPress digital experience platform.	[24]
Cornerstone OnDemand	2017	On November 8, 2017, Silver Lake Alpine led a $300 million investment in Cornerstone OnDemand, a cloud-based learning and human capital management software company.	[25]
Unity Technologies	2017	On May 24, 2017, Silver Lake announced an investment in Unity, the global game development platform.	[26]
SoFi	2017	On February 24, 2017, Silver Lake led a $500 million Series F financing round in SoFi to accelerate product and international expansion.	[27]
Ancestry	2016	On April 1, 2016, Silver Lake and GIC made an investment in Ancestry, the online family history data and personal DNA testing company.	[28]
Symantec	2016	On February 4, 2016, Silver Lake made a strategic investment of $500 million in Symantec. On June 13, 2016, it was announced that Symantec would acquire Blue Coat, and Silver Lake invested another $500 million in conjunction with the transaction.	[29]
SolarWinds	2015	On October 21, 2015, Silver Lake purchased SolarWinds for $60.10 per share, giving the company a total equity value of $4.5 billion. In October 2018, SolarWinds went public through an IPO.	[30]
EMC	2015	On 12 October 2015, EMC announced that they had agreed on a buy-out by Michael Dell and Silver Lake for $33.15 per share in a complicated cash transaction which included tracking stock in VMware, which remained a publicly traded company. The deal, when completed, totaled $67 billion, the largest technology buyout ever. Dell continues to hedge its bets that mergers are the way to expand the company when others are betting that spinoffs and smaller companies are better.[31]
Motorola	2015	On August 5, 2015, Silver Lake invested $1 billion in Motorola to help the company make new partnerships, investments, and acquisitions for its public safety solutions and services businesses. Motorola also used a portion of the investment to fund a share buyback.	[32]
Dell	2013	On February 5, 2013, Dell Inc. announced that it had agreed on a buy-out by Michael Dell and Silver Lake for $13.65 per share in cash. The shares of founder and CEO Michael Dell and some of its key management were not included in this purchase. Microsoft additionally provided $2 billion in the form of a loan to assist with the buy-out.[33][34] Upon completion of the deal Dell de-listed from NASDAQ and the Hong Kong Stock Exchange and became fully privately owned company as it was before its first initial public offering. According to Michael Dell, this move made it easier to work on a long-term growth strategy as the company could make choices that would payout on the longer term, without the need the address to demands of (short term) individual share-holders.[33] The deal was completed on October 30, 2013, and at $24.4 billion was then the largest technology buyout ever, surpassing the 2006 buyout of Freescale Semiconductor for $17.5 billion.[35] Other smaller investors were MSD Capital, an investment firm established to manage the wealth of Michael Dell, and Microsoft with its $2 billion loan, and there were several debt-facilities from banks like Barclays, Credit Suisse, Bank of America and Royal Bank of Canada.[36] In December 2018, Dell shareholders agreed to a proposal by Dell to engage in a reverse merger with the tracking stock tied to its interest in software provider VMware in which existing holders were invited to cash out some or all of their interest. Dell Technologies is now a public company again.
Global Blue	2012	On May 24, 2012, Silver Lake acquired Global Blue, a leading VAT services provider in Europe, for around €1 billion.	[37]
Endeavor	2012	On May 2, 2012, Silver Lake acquired a minority stake in William Morris Endeavor (WME). In December 2013, WME and Silver Lake announced they would acquire IMG. In July 2016, Silver Lake helped back WME-IMG’s acquisition of UFC. In October 2017, WME-IMG announced the formation of a new holding company, Endeavor, which took on the full portfolio of owned and operated brands formerly under the WME-IMG banner.	[38]
Alibaba	2011	In 2011 and 2012, Silver Lake made investments in Alibaba totaling a reported $500 million. In September 2014, Alibaba listed on the NYSE in the largest ever US-listed IPO, with Silver Lake maintaining a stake worth more than $5.1 billion at the time.	[39]
GoDaddy	2011	On July 1, 2011, Silver Lake and others joined with Bob Parsons to take GoDaddy private. In 2015, GoDaddy re-entered the public market.	[40]
Skype	2009	Silver Lake, Andreessen Horowitz and the Canada Pension Plan Investment Board announced the acquisition of 65% of Skype for $1.9 billion from eBay, valuing the business at $2.75 billion. In May 2011, Microsoft agreed to acquire Skype for $8.5 billion in cash.	[41][42][43][44]
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.	[45]
Sabre	2006	Silver Lake and TPG Capital announced a deal to buy Sabre, 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 2006, Blackstone acquired Sabre's chief competitor Travelport.	[46]
NXP Semiconductors	2006	In August 2006, a consortium of Silver Lake, Kohlberg Kravis Roberts and AlpInvest Partners acquired a controlling 80.1% share of the semiconductors unit of Philips for €6.4 billion. The new company, based in the Netherlands, was renamed NXP Semiconductors.	[47][48]
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 TPG Capital. 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. In 2015 the consortium sold the bulk of the Sungard business to FIS.	[49]
Broadcom	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. In 2013, Silver Lake reinvested $1 billion in Avago to help finance its acquisition of LSI. In 2015, Silver Lake supported Avago’s $37 billion acquisition of Broadcom, the biggest tech deal on record at the time.	[50] [51][52]

Controversy

After the sale of Skype to Microsoft in 2011,[43] Silver Lake was accused of unfairly depriving Skype employees of an options windfall.[53] At issue was a clause in the Skype employee stock option grant agreement. The repurchase right gave Skype the authority to buy back shares at the grant price, when an employee left the company, even when those shares were vested.

References

1. "Silver Lake - Overview". www.silverlake.com.
2. Silver Lake's New Four Amigos Dealmaker, September, 2007
3. "Silver Lake SEC Filing". The Street. October 7, 2019.
4. "Silver Lake eyes $4bn for sophomore structured equity effort". Buyout Insider. October 7, 2019.
5. "Silver Lake and the deal of the next century (Fortune, 1999)". 10 February 2013. Retrieved 1 June 2016.
6. Wall Street's New Alchemist (Glenn Hutchins Profile). BusinessWeek, August 8, 2005
7. Silver Lake Partners closes $3.6bn private equity fund Archived 2012-07-18 at Archive.today. AltAssets, April 13, 2004
8. Silver Lake to Raise $10 Billion for Technology Fund. February 6, 2007
9. Silver Lake Sumeru closes on $1.1bn Archived 2011-09-28 at the Wayback Machine. AltAssets, May 7, 2008
10. "Investor Spotlight: How Silver Lake's 'Four Amigos' built a tech buyout behemoth". PitchBook. April 9, 2018.
11. "Silver Lake Preps Expansion With Leadership Shake-Up". Institutional Investor. December 2, 2019.
12. Raval, Anjli; Fontanella-Khan, James; Parkin, Benjamin (September 3, 2020). "Silver Lake in talks to buy $1bn stake in Reliance Retail". Financial Times. Retrieved September 3, 2020.
13. "Silver Lake to Retool Top Leadership Positions". The Wall Street Journal. December 2, 2019.
14. "Expedia to boost liquidity with $3.2 billion capital raise, names new CEO". Reuters. April 23, 2020.
15. "Airbnb receives $1 billion investment from Silver Lake, Sixth Street Partners". Marketwatch. April 6, 2020.
16. "Silver Lake makes $1B investment into Twitter; Twitter, Elliott call truce as Dorsey remains CEO". TechCrunch. March 9, 2020.
17. "Self-driving car company Waymo raises $2.25 billion in first external round of funding". CNN. March 2, 2020.
18. "Manchester City's owner is worth nearly $5 billion after Silver Lake deal". CNN. November 27, 2019.
19. "Alphabet's Verily Gets $1 Billion Funding Round Led by Silver Lake". The Wall Street Journal. January 3, 2019.
20. "GE's digital unit to sell majority stake in ServiceMax". Reuters. December 13, 2018.
21. Bond, Paul (September 14, 2018). "Dalian Wanda Scales Back AMC Investment". The Hollywood Reporter. Retrieved May 10, 2019.
22. "Silver Lake Buys $500 Million Stake in Credit Karma". The Wall Street Journal. March 28, 2018.
23. "Silver Lake, P2 Capital to Take Blackhawk Network Private for $2.57 Billion". The Wall Street Journal. January 16, 2018.
24. "Silver Lake Takes $250 Million Stake in Startup WP Engine". Bloomberg. January 4, 2018.
25. "Silver Lake, LinkedIn Invest $300 Million in Software Provider Cornerstone OnDemand". The Wall Street Journal. November 8, 2017.
26. "Videogame Software Startup Unity Is Valued at $2.8 Billion". The Wall Street Journal. March 23, 2017.
27. "SoFi Raises $500 Million Led by Silver Lake for Global Expansion". Bloomberg. February 24, 2017.
28. "Silver Lake, GIC to Buy Stake in Ancestry.com". The Wall Street Journal. April 1, 2016.
29. "Symantec Gets $500 Million Investment From Silver Lake". The Wall Street Journal. February 4, 2016.
30. "SolarWinds to be Bought by Silver Lake, Thoma Bravo". The Wall Street Journal. October 21, 2015.
31. "In Takeover of EMC, Dell Makes Ambitious Bet". The New York Times. 12 October 2015. Retrieved 1 June 2016.
32. "Silver Lake bets $1 billion on Motorola Solutions". Reuters. August 6, 2015.
33. Official Dell press release on (leveraged) buyout by Michael Dell and Silver Lake Archived 2013-02-10 at the Wayback Machine, 5 February 2013. Visited: 5 February 2013
34. Berkowitz, Ben; Edwin Chan (2013-02-05). "Dell to go private in landmark $24.4 billion deal". Reuters. Retrieved 2013-02-05.
35. Alden, William (2013-02-05). "Dell's Record-Breaking Buyout". The New York Times. Retrieved 2013-02-05.
36. Financial Times website: Michael Dell orchestrates $24bn buyout deal, 5 February 2013
37. "Silver Lake and Partners Group to Buy Global Blue for $1.25 Billion". The New York Times. May 24, 2012.
38. "WME-IMG Renames Holding Company Endeavor". Variety. October 9, 2017.
39. "Silver Lake Reaps a Golden Return on Its Alibaba Stake After the I.P.O." The New York Times. September 21, 2014.
40. "GoDaddy's IPO to value web-hosting company at up to $2.87 billion". Reuters. March 19, 2015.
41. EBay to Sell 65 Percent Of Skype For $1.9 Billion. New York Times, September 1, 2009
42. "eBay Inc. Signs Definitive Agreement to Sell Skype in Deal Valuing Communications Business at $2.75 Billion - Business Wire". Retrieved 1 June 2016.
43. Skype Investors Reap Windfall in Deal With Microsoft. New York Times, May 10, 2011
44. The Big Winners in the Skype Deal. New York Times, May 10, 2011
45. "Investment Firms Pick Up Avaya For $8.2 Billion - InformationWeek". Retrieved 1 June 2016.
46. Sorkin, Andrew Ross. "2 Firms Pay $4.3 Billion for Sabre." New York Times, December 12, 2006.
47. Bloomberg News (2006-08-04). "Technology; Royal Philips Sells Unit for $4.4 Billion". New York Times. Retrieved 2008-04-27.
48. KKR in deal to buy Philips Semiconductors. Forbes, August 2, 2006
49. "Capital Firms Agree to Buy SunGard Data in Cash Deal." Bloomberg L.P., March 29, 2005
50. "Avago files for $400m IPO". 2008-08-28.
51. Avago Tech. (AVGO) Sees IPO Price of $13-$15. Street Insider, July 27, 2009
52. Avago Technologies Limited Prices Initial Public Offering. MSN Money, August 5, 2009
53. Why Some Skypers Are Seeing Red. Bloomberg Businessweek Magazine, June 23, 2011

External links

• Silver Lake (company website)