Silver Lake closes Fund IV on $10.3bn

The firm has closed one of the most successful fundraisings in recent years, amassing commitments beyond its target of $7.5bn for the vehicle.

Silver Lake Partners has closed its Fund IV on $10.3 billion, well above its $7.5 billion target, making it the largest-ever private equity fund raised for technology-focused investments, the firm said in a statement Thursday.

“Our strategic discipline, deep technology expertise and commitment to the standards of excellence and alignment of interests expected by our limited partners contributed to our fundraising success and to the continued development of a strong investment partnership,” said Susannah Carrier, managing director and head of Silver Lake’s fundraising and investor relations, in the statement.

About 75 percent of the capital raised for Fund IV came from existing investors, with the balance coming from new investors, as well as a commitment from the GP and affiliates, according to a person with knowledge of the fundraising. Silver Lake attracted more than half of its fund total from LPs outside the US, the person said.

LPs who backed Fund IV were also giving a signal of their support for the firm's management group, which along with original founder Jim Davidson now includes younger partners Mike Bingle, Egon Durban, Ken Hao and Greg Mondre. In late 2011, those younger professionals were elevated to managing partners and formed the management group. Original founder Glenn Hutchins remains involved in daily activity of the firm though he is not a member of the management group, while original founder David Roux has largely stepped back from day-to-day involvement.

Silver Lake launched marketing for Fund IV in March 2012, with a target of $7.5 billion. Demand was likely driven in part by the firm’s uber-successful exit of instant messaging service Skype, which notched Silver Lake $8.5 billion. The firm had led an investor consortium in the $1.9 billion acquisition of Skype in 2009.

From the archives:

Privately Speaking with Jim Davidson of Silver Lake

Silver Lake now manages $23 billion in combined assets under management and committed capital, according to the statement.

Silver Lake’s third fund collected $9.3 billion in 2007 and was generating a 17.3 percent internal rate of return and a 1.4x multiple as of 30 September, 2012, according to performance information from the California Public Employees' Retirement System. Its second fund, which collected $3.6 billion in 2004, was generating a 9.8 percent IRR and a 1.6x multiple, according to the CalPERS performance information.

Earlier this year, Silver Lake made a bid for Dell along with the computer company’s founder, Michael Dell, for about $24.4 billion. If the deal is ultimately successful, the vast majority of Silver Lake’s $1.4 billion equity contribution would come from the firm’s third fund, rather than the new vehicle, sources told PEI in a prior interview.