Silver Lake Exceeds Target Raising $10.3 Billion for LBOs

Silver Lake Management LLC, the private-equity firm partnered with Michael Dell in a bid to buy computer maker Dell Inc., garnered $10.3 billion for its latest fund after raising its limit to meet investor demand.

The fund is the largest ever pool dedicated to technology buyouts, Menlo Park, California-based Silver Lake said today in a statement. Investors’ commitments to the fund, Silver Lake Partners IV, topped a $7.5 billion target at a time when some firms are struggling to attract capital.

Private-equity firms are competing for a limited pool of investor money. A record 1,949 funds were seeking $797.1 billion as of the end of last year, according to data by London-based researcher Preqin Ltd. Silver Lake, which began raising money in March of last year, is among the few buyout firms that have been able to amass large amounts of capital relatively quickly as many investors turn their attention to small and middle-market buyout funds. Advent International Corp., the Boston-based firm that began raising money at the same time, closed its latest fund at 8.5 billion euros ($11.1 billion) in November.

“In terms of technology-oriented funds, Silver Lake is definitely best in class,” André Bourbonnais, senior vice president of private investments at the C$172.6 billion ($168.5 billion) Canada Pension Plan Investment Board, said in a phone interview. Bourbonnais said the pension fund made a significant commitment to the Silver Lake pool, whose size he declined to disclose.

Fund Returns

Silver Lake’s Fund III was generating a 1.4 times net multiple of invested capital and a 17 percent net internal rate of return as of Sept. 30, according to a Silver Lake presentation, a copy of which was obtained by Bloomberg News. Fund II was producing a 1.5 times net multiple and 10 percent net IRR.

Silver Lake, based in Menlo Park, California, is vying with Blackstone Group LP and activist investor Carl Icahn for computer maker Dell. (DELL) Dell’s board tentatively agreed Feb. 5 to a $24.4 billion offer by Michael Dell and Silver Lake that would give Dell’s founder a controlling stake. Blackstone and Icahn later made nonbinding offers that Dell said may be superior. They’re examining Dell’s books before deciding whether to proceed with final offers.

Like many of its peers, Silver Lake is offering management- fee breaks to clients that make large commitments to the new fund, according to a marketing document sent to prospective investors last year.

To contact the reporters on this story: David Carey in New York at dcarey13@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net; Sabrina Willmer in New York at swillmer2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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