It’s no surprise that private equity investors are loathe to associate themselves with anything tech-related these days. However, there is a small collective of tech buyout shops in the business of making everybody else’s pains their gains.
“We’re seeing a lot of very interesting deals and are looking at subsidiaries of large technology companies, orphaned assets and undervalued but stable tech companies,” said Glenn Hutchins, co-founder of tech buyout giant Silver Lake Partners LLC.
For example, Los-Angeles-based private equity firm Gores Technology Group recently agreed to purchase the PC division of Micron Electronics, which is now called Micron PC, for an undisclosed amount and $170 million in liabilities. At the same time, the group also agreed to purchase Hewlett Packard‘s Verifone, which is a provider of electronic payment capabilities to financial institutions, merchants and consumers, for an undisclosed amount. “Given that we’re in the distressed business, there will be a continuous flow of opportunities for the rest of the year,” said David McGovern, an executive vice president at Gores Technology.
Gore’s rival, Platinum Equity LLC, has also been busy scooping up technology assets. The firm recently made undisclosed bets on the AMISYS 3000 and Pathways Managed Care products groups from the Information Technology Business of McKesson HBOC Inc.. Platinum Equity also in July signed a definitive agreement to acquire Motorola‘s Multiservice Networks Division for an undisclosed amount.
And not to be left out of the tech foray, long-time tech investor TA Associates in July completed a $40 million investment in Ixion Technologies Inc., a provider of packaging services to satellite, aerospace and fiber optic communications manufacturers.
Even a few buyout funds with a technology slant have had successful closings in an otherwise tough fund-raising market. Genstar Capital and Golden Gate Capital, both based in San Francisco, held final closings of $221 and $700 million respectively this year.
However, despite the handful of tech deals out there, tech specialists have not necessarily been in a hurry to deploy their capital. “This is not the time when you want to be in a rush and get enthralled with momentum, growth or unproven businesses,” said Justin Chang, a partner at Texas Pacific Group. “So at this point we’re being quite patient and disciplined in hoe we approach investment opportunities,” he said.
Contact Hung Tran at Hung.Tran@tfn.com