Silver Lake in $500m Thomson PIPE

In its largest equity investment and its first European investment, Silver Lake Partners has acquired a 7.5 percent stake in media equipment company Thomson.

Silver Lake Partners, the Menlo Park, California and New York mature-technology investment firm, has agreed to invest $500 million (€407 million) in Thomson, a publicly traded provider of technologies, equipment and services for the entertainment and media industries.

Thomson controls the Technicolor, Grass Valley, THOMSON and RCA brands.

The investment will be in the form of convertible subordinated bonds with 3 percent coupons and a conversion price of €17. Thomson’s stock currently trades on the Paris Stock Exchange for €15.42 per share. On an as-converted basis, Silver Lake will own 7.5 percent of Thomson.

David Roux, a Silver Lake founding partner, led the deal for the firm and will join Thomson’s board of directors.

The investment is the first from the firm’s latest $3.6 billion fund, which closed in April. The investment is a bet on the digitisation of the media industry. In a statement, Roux said: “As the media and entertainment industries become increasingly digital, Thomson is in a truly unique position to provide its customers with integrated solutions across the entire digital media services value chain.

Private investments in public equities, or PIPEs, were popular among US private equity firms in the late 1990s and early 2000s as buyout firms sought ways of participating in the telecom and tech boom on the stock market. Most of these minority investments ended in disaster when the market collapsed.