Silver Lake Co-Ceo Hutchins Sees Strong Returns on Technology Firms' Debt

Silver Lake, the private-equity firm that co-owns Skype Technologies SA, generated returns of 85 percent from buying up technology company debt in the past 15 months and sees more opportunity to profit from the securities.

“That’s going to continue, that’s going to be a persistent trend over the coming years as this debt continues to need to be refinanced,” co-Chief Executive Officer Glenn Hutchins said today in a speech at a venture-capital conference in Ottawa.

Silver Lake, which has about $14 billion in assets, began buying the debt of technology companies about a year and a half ago, Hutchins said. He didn’t name any companies. “People all said to me, what do you know about debt? I don’t know a whole lot about debt, but I do know a lot about technology.”

Silver Lake and Warburg Pincus LLC agreed to buy financial- information provider Interactive Data Corp. for $3.4 billion, the companies said in a statement this month. It is the Menlo Park, California-based firm’s first major deal since leading the $1.9 billion purchase of a majority stake in Internet-based calling provider Skype in September.

Skype, based in Luxembourg, said it expects the number of registered users to almost double to 1 billion by 2015 and that higher-paying business customers would account for half of its clientele by then.

“The mobility trend is by far, by far the biggest technology trend of our lifetime,” Hutchins said. “This is by far the biggest addressable market in the history of commerce and it’s exploding.”

Hutchins was less optimistic about the strength of a global economic recovery.

“Everybody who tells you, in my view, that the recovery has begun and is sustainable from here is not thinking correctly,” he said. “You have to work your way first through the excesses that built up during the period of crisis and root those out of the system. That doesn’t happen overnight.”

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net.

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