New Jersey to commit $200m to Silver Lake

New Jersey Division of Investment staff was impressed by Silver Lake’s ‘knowledge, ability and sourcing’ of technology-enabled deals.

The New Jersey State Investment Council cleared the path for a commitment of up to $200 million to Silver Lake Partners IV at its meeting Thursday. The commitment is expected to be finalised by New Jersey’s investment staff soon, according to director Timothy Walsh. 

Silver Lake had collected more than $7 billion toward the fund’s $7.5 billion target as of last week. A New Jersey investment staff report indicates Partners IV has a $10 billion hard-cap.

Upon finalisation of the commitment, the pension system will pay a 1.425 percent management fee on committed capital and a 0.95 percent fee on invested capital, according to the New Jersey report. The report lists firm co-founder Jim Davidson as a key investment professional, along with managing partners and managing directors Kenneth Hao, Greg Mondre, Mike Bingle and Egon Durban.

Silver Lake utilised Credit Suisse as a placement agent for Partners IV, according to an SIC memorandum.  

New Jersey’s investment staff cited Silver Lake’s “knowledge, ability and sourcing” of large-cap buyouts and growth capital opportunities in technology-enabled sectors as one reason for re-upping with the firm. Partners IV’s investment strategy will focus on big data analytics, e-commerce, social and digital media, mobility and software as a service, according to an SIC memorandum.   

New Jersey previously invested in Silver Lake Partners III, a $9.36 billion 2007 vehicle. That fund had generated a 16.76 percent net internal rate of return and a 1.58x multiple as of 30 September, 2012, according to the memo. 

Those returns were bolstered, in part, by the firm’s investment in Skype, a web-based call service that was sold to Microsoft by its ownership group for $8.5 billion in 2011. 

Earlier in the meeting, The Blackstone Group co-founder Steve Schwarzman gave a presentation describing his views on the global economy. Following his presentation, Schwarzman discussed the pressure LPs have put on fund managers to lower fees.  

New Jersey’s $70.8 billion state pension fund had a 6.83 percent allocation to buyouts and venture capital as of 31 October, according to investment reports.