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Silver Lake Drops Plan for Second $1 Billion Sumeru Fund

Silver Lake Management LLC, the biggest technology-focused private-equity firm, abandoned a plan for a second $1 billion fund at its middle-market unit because two managing directors are reducing their roles at the division.

Ajay Shah and Hollie Haynes at the Silver Lake Sumeru LP unit “are not committed to pursuing a second SLS fund,” the Menlo Park, California-based firm said in a letter to investors obtained by Bloomberg News. Silver Lake had sought to raise $1 billion for the new fund, which was scheduled to debut this year, people familiar with the plan said in November.

Silver Lake Sumeru, which was introduced in 2008 and raised $1.1 billion, was among the backers of PrimeSense Ltd., the Israeli maker of motion-tracking chips that was acquired by Apple Inc. last year. Silver Lake Management, which was founded in 1999 and manages more than $20 billion in assets, also joined with Michael Dell to buy computer-maker Dell Inc. for $24.9 billion in 2013.

“While we have been encouraged by the very strong demand for a second SLS fund, we have made the decision not to pursue this opportunity,” Silver Lake said in the letter.

The firm said in 2012 that Shah would take a reduced role at the middle-market unit, according to the letter. Haynes is pursuing “new investment activities outside of Silver Lake,” while still staying involved with Sumeru fund, the firm said.

Sumeru Returns

The “remaining core” of Sumeru’s investment team is looking at plans to raise a smaller, independent fund outside of Silver Lake, and the firm is supportive, according to the letter.

“Key managers matter and if a transition has not been thought through the firm loses, sometimes its soul,” said Jennifer Fonstad, who recently left Draper Fisher Jurvetson to co-found Aspect Ventures.

Sumeru invested $977 million as of Dec. 31 and had a return of $724 million, according to the letter. The fund, which has an investment return ratio of 17 percent gross, has the potential for two more investments which it intends to pursue, Silver Lake said.

Other exits of Silver Lake Sumeru portfolio companies include SanDisk Corp.’s acquisition of Smart Storage Systems Inc. in August for $307 million. ABB Ltd. bought Power-One Inc., a renewable energy company, in July for about $1 billion. International Business Machines Corp. purchased software-maker i2 Ltd. in 2011 for $500 million.

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