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Silver Lake gets expansion boost from CalPERS investment

The California Public Employees Retirement System takes a 9.9 percent investment stake in the technology private equity firm.

Silver Lake, a major private equity investor into technology companies, announced Wednesday it got a boost to its expansion plans with the help of pension fund behemoth CalPERS.

The California Public Employees Retirement System (CalPERS) has taken a 9.9 percent stake in Silver Lake, which has invested in such companies as Flextronics with a $200 million investment, Avaya through a leveraged buyout, and the creation of Avago Technologies via a $2.7 billion acquisition and carve-out of Agilent Technologies' chip business.

Silver Lake is also known for the incredibly complex $20 billion buyout transaction of Seagate Technology in 2000, which left the private equity firm paying $1.7 billion of that tab for Seagate's hard disk drive business and leaving the company's software business to Veritas. Two years later, the Seagate business that Silver Lake acquired announced plans to go public and today it has a market cap of $11.2 billion.

But back to the CalPERS investment. The pension funds investment into Silver Lake will be used to expand the private equity firm's business operations, as well as its global footprint. Silver Lake primarily invests in large-cap tech companies via its Silver Lake Partners funds, but more recently tested the waters on midmarket investing with Silver Lake Sumeru and debt investing with Silver Lake Financial.

Although the parties did not disclose the dollar value of the investment, it likely wasn't cheap. And CalPERS plans to throw more money at Silver Lake, but as a limited partner in some of its Silver Lake funds. CalPERS was a limited partner in the private equity firm's first Silver Lake fund back in 1999, and today, Silver Lake has more than $16 billion in assets under management for its various funds.