Silver Lake, with new leadership slate, could raise $18bn for next flagship fund

At that amount, the fund will be the largest such investment pool dedicated solely to technology investing.

The next mega-fund behemoth is heading to market soon.

Silver Lake Partners is preparing to launch its sixth flagship fund, probably in the second quarter, three sources told Buyouts.

Fund VI could target around $15 billion and raise as much as $18 billion to $20 billion, three of the sources said. At that amount, the fund will be the largest such investment pool dedicated solely to technology investing.

Silver Lake’s competitors include Vista Equity and Thoma Bravo, both of which target investments in enterprise software companies. Last year, Vista closed its latest flagship pool, Fund VII, on $16 billion, and Thoma Bravo closed its large pool, Fund XII, on $12.6 billion.

Thoma Bravo is expected to start raising its 13th flagship pool this year with a potential target of $15 billion, a limited partner with knowledge of the firm told Buyouts, confirming an earlier Bloomberg report.

Silver Lake closed its last flagship fund on $15 billion in 2017. Fund V was generating a 12.04 percent internal rate of return and a 1.1x multiple as of June 30, 2019, according to performance information from Washington State Investment Board.

Performance of other Silver Lake funds as of June 30, 2019, according to Washington State:

  • Fund IV, which closed on $10.3 billion in 2013, produced a 27.26 percent IRR and a 1.8x multiple;
  • Fund III, which raised $9.3 billion in 2008, had a 18.72 percent IRR and a 2x multiple;
  • Fund II, which closed on $3.6 billion in 2004, generated an 11.03 percent IRR and a 1.8x multiple

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.

Silver Lake Alpine raised at least $2.5 billion as of last May, Buyouts reported. The firm also is raising its third Waterman fund, targeting $750 million, Buyouts reported.

A spokeswoman for Silver Lake declined to comment Tuesday.

Action Item: Check out Silver Lake’s Form ADV here: