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Despite pandemic slowdown, Silver Lake quickly approaches $15bn on flagship

Silver Lake’s fundraising is benefiting from a limited partner flight to quality, in which large institutions are committing capital only to their best performing PE relationships.

Silver Lake raised nearly $15 billion for its sixth flagship fund, which it launched into the teeth of the pandemic downturn, a source told Buyouts.

The downturn appears to have had no effect on Silver Lake’s fundraising process, which kicked off in the first quarter. Fund VI is expected to reach $18 billion as a final tally, which could come as soon as August, the person said.

Park Hill Group is working as placement agent on the fundraising. A spokeswoman for Silver Lake declined to comment.

Silver Lake’s fundraising is benefiting from a limited partner flight to quality, in which large institutions are committing capital only to their best performing PE relationships, sources have told Buyouts in past interviews. “There’s some big investors in there writing big checks,” an LP who was exploring a commitment to the fund previously told Buyouts.

This dynamic is keeping the private equity fundraising market fairly robust, even as other GPs delay fundraisings and overall numbers fall well short of the records hit last year.

“We have heard of some instances of groups pushing off fundraisings,” according to an LP who has steadily made commitments through the second quarter. “A lot of our core managers were coming back this year, they all had good numbers and some expedited their processes, wanting to get started earlier because they think fundraising will take longer.”

Silver Lake closed its last flagship fund on $15 billion in 2017. Fund V was generating a 15.77 percent internal rate of return and a 1.2x multiple as of December 30, 2019, according to performance information from Washington State Investment Board.

Silver Lake’s first fund closed on $2.3 billion in 1999. The firm was formed by Glenn Hutchins, a former Blackstone Group executive, along with Integral Capital Partners, which was 50 percent owned by Kleiner Perkins at the time, giving KPCB a 12.5 percent stake in Silver Lake; James Davidson, a former investment banker at Hambrecht & Quist; and David Roux, a former executive vice president at Oracle.

At the end of 2019, the firm set up a new leadership slate, naming managing partners Egon Durban and Greg Mondre as co-CEOs. The firm named managing partner Kenneth Hao as chairman. Mike Bingle transitioned from managing partner to vice chairman and managing partner emeritus. The firm also promoted Joe Osnoss to the position of managing partner.

Silver Lake has several fund families: its flagship funds; its growth-focused, pre-IPO Waterman funds; its non-control, credit and structured equity fund called Alpine; and its energy-and-resources innovation-focused Kraftwerk funds.

Update: This report was updated to include a decline to comment from a Silver Lake spokeswoman.