- Has invested $500 million in Alibaba
- GoDaddy IPO also queued up
- Mercury Payment sold earlier this year
Silver Lake also holds nearly three-tenths ownership in GoDaddy Inc, which also has filed to go public, and the firm had been poised for yet another IPO earlier this year by Mercury Payment Systems LLC, which instead ended up being sold for about $1.7 billion.
Any big exits by Silver Lake could lift the returns for its 2007 vintage Silver Lake Partners III LP fund, which rang up an IRR of 17.3 percent as of Dec. 31, 2013, for the Washington State Investment Board, according to pension fund data compiled by Buyouts.
Given the surging valuations in equities and growing tech companies, Alibaba may command a $200 billion market valuation when it debuts on the New York Stock Exchange in mid-September, according to a report by sister news service Reuters.
That’s about 5x more than the $40 billion valuation of Alibaba in 2012, when Silver Lake made a follow-on investment of $200 million to help finance Alibaba’s purchase of half of Yahoo Inc’s 40 percent share the company for $7.6 billion, according to published reports.
Silver Lake initially invested $300 million in Alibaba in 2011, teaming up with DST Global, Yunfeng Capital and Temasek Holdings on a $1.6 billion tender offer for employee-owned shares of Alibaba. The transaction gave the group a 5 percent share of Alibaba, which was valued at $32 billion under the deal, according to reports at the time.
Asked about the Alibaba deal in July, Glenn Hutchins, co-founder of Silver Lake, declined to comment. But he said IPOs from key technology companies remain in favor.
“You don’t really think about cyclical factors when you’re investing in technology. You’re thinking about secular technology trends,” Hutchins said in July at the Brainstorm Tech Conference in Aspen, Colorado. “On the other hand, there are lots of companies going public nowadays and there’s a big IPO funnel and everybody in the investment industry has deals in the IPO pipeline because this is the time when the markets are receptive to that. Investors want to buy those things.”
Silver Lake holds a 28 percent share in GoDaddy Inc, the Internet domain name specialist that filed a $100 million IPO in June. Terms of the IPO have yet to be announced. GoDaddy was valued at $2.25 billion when Kohlberg Kravis Roberts & Co, Silver Lake and Technology Crossover Ventures bought the company in 2011.
In another IPO tale for Silver Lake, Mercury Payment Systems got scooped up for about $1.65 billion by payment processor Vantiv Inc in a deal that closed in June. With an investment in the company in 2010, Silver Lake held 60 percent of Mercury Payment Systems, which was expected to command a market valuation of up to $2.5 billion in its IPO, according to Reuters.
To be sure, not every deal has worked out thus far.
Earlier this year, Silver Lake-backed Virtu Financial filed an IPO to raise up to $100 million. But the market technology company was pulled off the front burner in April, reportedly in the wake of controversy surrounding high frequency trading. A spokesman for Virtu Financial declined to comment on the company’s IPO, which has not been officially withdrawn after its most recent amended filing in March.
Also on the exit front, Silver Lake and BC Partners sold MultiPlan Inc to a consortium led by Starr Investment Holdings and Partners Group in March, in a deal that valued the health insurance claims processor at a reported $4.4 billion, after its 2010 investment in the company.
And Silver Lake isn’t just selling. In one of its freshest deals, Silver Lake set plans to buy Quorum Business Solutions from The Carlyle Group and Riverstone Holdings, for an undisclosed sum. Silver Lake said it tapped its Silver Lake Partners and Silver Lake Kraftwerk funds to acquire the company, a provider of software and services of operational, administrative, financial and transactional business processes for the energy and natural resource sectors.
Silver Lake is vying with Bain Capital LLC to buy Shutterfly Inc, in a deal that values the online photo service at $2 billion, Reuters reported on Aug. 20.
Last year, Silver Lake LLC closed Silver Lake Partners IV with $10.3 billion in total commitments. In 2013, it also completed the blockbuster take-private deal of Dell Inc valued at $24.9 billion with founder Michael Dell. Late last year, it scooped up venerable talent agent company IMG Worldwide Inc in a deal valued at about $2.3 billion.
A spokesman for Silver Lake declined to comment on this story.