Two years later, as the broad markets were recovering from the financial collapse, Avago went public. It raised $648 million in August 2009. Silver Lake and KKR sold a 17 percent stake in the offering, receiving $336 million in proceeds. Temasek sold about 3 percent and realized about $35.6 million. The private equity firms retained a 72 percent stake in Avago. Deutsche Bank, Barclays, Morgan Stanley and Citi were bookrunners on the IPO.
Since that time, the consortium has sold stock five times. The first occurred in January 2010 when KKR and Silver Lake—via an entity called Bali—sold a roughly 10 percent stake, or about 22 million shares. Temasek (through an entity called Seletar) sold a 1.4 percent stake, or about 3 million shares. Silver Lake-KKR realized about $390.9 million from the sale, while Temasek made $52.1 million.
The second sale came in August 2010. Silver Lake-KKR offered 5 percent, making $244.8 million, while Temasek sold 0.7 percent (237,444 shares) for $32.64 million. With this sale, just a year after the Avago IPO, KKR, Silver lake and Temasek had already recouped their $1 billion investment.
But the buyout shops didn’t stop. Four months later, in December of 2010, Silver Lake-KKR sold another 10 percent, netting about $594 million. Temasek, meanwhile, offered 1.3 percent and received $78.4 million.
In January, Silver Lake-KKR offered 8.4 percent, realizing $568.9 million, while Temasek sold 2 percent, gaining $137.3 million. The private equity firms again sold stock this month. Silver Lake-KKR offered another 8.4 percent, realizing about $666.3 million. Temasek offered 1.1 percent for $87.75 million.
In all, the private equity firms have realized about $3.1 billion in proceeds from the IPO and secondary sales. Silver Lake-KKR still retain a 22 percent stake, which is valued at $1.65 billion. Temasek, meanwhile, holds nearly 3 percent, valued at $216 million.
“This deal is a huge home run for the PE firms,” one banker said.
Avago’s fortunes have also improved since the IPO but much of this is probably due to the broad market rebound. In February, Avago reported first quarter profit of $119 million, up from $38 million a year ago. Net revenue was $550 million. Total liabilities are $327 million. Shares have more than doubled since their $15 IPO price.
By comparison, Avago had $693 million revenue for the six months ended May 3, 2009. The company reported a $25 million net loss for the time period. Long term debt and capital lease obligations, as of May 2009, were $704 million, according to SEC filings.
Ed Snyder, an analyst at Charter Equity Research, said Avago has performed “pretty well” since its IPO in 2009. “The overhang of the PE guys hasn’t helped the stock much,” he said. “But everyone in this space has been doing well. A lot of capacity came out of the 2008 downturn.”
Avago, Snyder said, has performed as well as rival TriQuint but not as well as Skyworks. Avago “has been an average performer for a semiconductor company,” he said.
Officials for KKR, Silver Lake declined comment.