Elliott Targets Tech Buyouts With Evergreen Private Equity Arm

  • Paul Singer’s $28 billion hedge fund adds private equity unit
  • Jesse Cohn overseeing PE as well as activist investing

Sometimes-activist hedge fund Elliott Management is a familiar name in 13D filings. As of Monday, its new private equity arm began making a name for itself in technology buyouts.

Jesse Cohn, who runs Elliott’s U.S. activist investments, this week debuted the private equity affiliate of Paul Elliott Singer’s $28 billion investing empire -- Evergreen Coast Capital Corp. -- by agreeing to acquire Dell Inc.’s software unit in partnership with Francisco Partners Management.

Cohn is infamous throughout technology boardrooms and Silicon Valley C-suites for amassing near 10 percent activist stakes in public companies and aggressively pushing for strategic moves.

The next time Elliott discloses a stake in a public technology company, the hedge fund may have its own buyout in mind, rather than its usual activist playbook of agitating for a sale to someone else.

The buyouts won’t necessarily be previous targets. Evergreen Coast’s first tech private equity deal -- said to be valued at more than $2 billion -- comes as Dell sells assorted assets to reduce debt amid its $67 billion takeover of EMC Corp. Elliott holds an active stake in EMC.

Opportunistic Investing

Cohn, 36, for about a decade has split his time between Elliott’s New York headquarters and Silicon Valley. He will continue to run Elliott’s activist strategy, while also overseeing the private equity arm.

“Elliott has always sought to develop our capabilities, through deeper research, true operational understanding and purpose-built teams to approach each situation,” Cohn said Wednesday. “These capabilities have served to both strengthen our public and activist approach, as well as enabled us to invest opportunistically into private equity situations.”

Elliott recruited former Golden Gate Capital principal Isaac Kim as Evergreen Coast’s managing director, and under that unrelated and less threatening name has quietly built a private equity team at its new offices on Sand Hill Road in Menlo Park.

Started by Singer in 1977, Elliott Management’s two funds invest across all its strategies, which include long-short hedge funds, distressed credit, arbitrage, real estate, shareholder activism -- and now private equity. Evergreen Coast means Cohn can profit by antagonizing for an auction, and potentially bid on it too, positioning Elliott to also benefit from any longer-term upside that follows a buyout.

Argentina Default

Aggressive even by hedge-fund standards, Elliott is probably best known for a battle with Argentina’s government over that nation’s 2001 bond default. Under Cohn, Elliott’s activist focus has usually been on lower-profile enterprise software and technology hardware companies which provide essential -- but largely invisible -- cogs in data networks.

Cohn’s target companies have often ended up in the portfolios of a shortlist of tech-savvy PE firms -- Thoma Bravo, Permira Advisers, Vista Equity Partners, Francisco Partners, Silver Lake Management and Bain Capital -- who regularly repackage them for strategic buyers.

Private Equity

Elliott has already participated in some private equity deals. It partnered with Insight Venture Partners on the buyout of E2open Inc., and rolled its stake in Metrologic Instruments Inc. when Francisco Partners acquired it. The investor also rolled its activist stakes into takeovers of BMC Software Inc. and MSC Software Corp.

Activist targets have sometimes rebuffed Cohn’s advances, only to be acquired eventually anyway. In 2010, Elliott’s bid for software maker Novell Inc. led to its sale eight months later to Attachmate Corp., with the activist rolling its stake. Elliott also bid for Epicor Software Corp., later acquired by Apax Partners, and for Compuware Corp. before it was sold to Thoma Bravo.

At Packeteer Inc., Elliott both bid for the company and then rolled its shares into its acquisition by Blue Coat Systems Inc. -- which was subsequently acquired by Thoma Bravo, then Bain, and this month, Symantec Corp., where Elliott already holds a stake.

Tech Targets

Riverbed Technology Inc. said in March 2014 it had no “credible” offers, after Elliott bid $21 a share for the company in a Cohn campaign that included a 78-page draft merger agreement that any interested suitor could adopt. Riverbed later sold itself to Thoma Bravo and Teachers’ Private Capital.

The list of Elliott’s targeted technology companies that have subsequently sold is even longer, including Qlik Technologies Inc., Informatica Corp. and Emulex Corp. The firm also recently pushed Polycom Inc. and Mitel Networks Corp. to merge. Cohn has agitated for other changes at technology providers including Citrix Systems Inc., NetApp Inc., Juniper Networks Inc. and Brocade Communications Systems Inc.

On Monday, Elliott disclosed it has a 9.8 percent activist stake in cyber-security software maker Imperva Inc., and last week revealed an 8.8 percent active holding in identity theft protection monitor LifeLock Inc. The next move may be Evergreen Coast’s to make.

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