Silver Lake Management LLC, the biggest technology-focused private-equity firm, isn’t considering diversifying its business or taking itself public as its larger peers have done, co-founder Glenn Hutchins said.
“As long as we can produce outsized returns for our investors, we resist the siren song of those sorts of things,” Hutchins said today in an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle.
Silver Lake’s biggest competitors, including Blackstone Group LP, KKR & Co. and Carlyle Group LP, have diversified their lines of business and increased their assets to support further expansion in real estate, credit and hedge funds-of-funds. The firms also went public to gain permanent capital to grow and position founders to cash out. Blackstone held its initial public offering in 2007, KKR gained a U.S. listing in 2010 and Carlyle’s IPO came in May.
Silver Lake, co-founded by Hutchins, Jim Davidson and David Roux in 1999, oversees $14 billion in assets under management. The firm focuses on investments including large-capitalization and middle-market technology, debt holdings and energy and natural resources, according to the Menlo Park, California-based firm’s website.
Silver Lake had its best returns from its $2.3 billion debut fund, Silver Lake Partners LP, raised 13 years ago. The fund produced a net multiple of 2.5 times invested capital and a net internal rate of return of 25 percent as of Dec. 31, according to a private-placement memorandum sent to investors in March, a copy of which was obtained by Bloomberg News.
Skype Technologies SA, maker of the software that allows users to make video and voice calls over the Internet, has been the strongest investment from Silver Lake Partners III, which raised about $9.4 billion in 2007, according to the memo. Skype produced a more than threefold profit for investors when the Luxembourg-based company was sold to Microsoft Corp. last year.
“Finding places where you can invest capital without the headwind of that contracting growth is a very important place to be,” Hutchins said. “Technology is one of the leading parts of that.”