Silver Lake Shoots For First Close Of Latest Fund In June

   By Laura Kreutzer 
   Of DOW JONES LBO WIRE 
 

Silver Lake Partners, the technology-focused firm that sold Skype to Microsoft Corp. (MSFT) last year, is seeking $8 billion to $9 billion for its newest large buyout fund, according to two prospective investors.

The Cupertino, Calif., firm aims to hold a first closing for the fund in June, these prospective limited partners said.

A $9 billion goal would put the Silver Lake Partners IV LP roughly in line with the $9.3 billion the firm raised for Silver Lake Partners III LP and comes at a time of intense competition for investor dollars as more large buyout shops look to raise fresh capital.

Silver Lake will be able to point to solid performance from its third fund as it hits the marketing trail. As of Sept. 30, Fund III was generating a 19.5% net internal rate of return, according to performance data published by the Washington State Investment Board, which committed $250 million to the fund.

Meanwhile, Silver Lake Partners II LP, a $3.6 pool raised in 2004, was generating a 9.73% net IRR as of the same date, according to the Washington State Investment Board data. Although the pension system didn't back the firm's debut fund, separate performance data published by the California Public Employees' Retirement System shows Silver Lake Partners I LP produced a 25.5% net IRR as of June 30.

One of the firm's backers said the fund raising isn't necessarily a slam dunk, given the constraints many limited partners face these days.

"I don't see a lot of LPs going back to funds with a larger commitment than the prior fund," this investor said, adding he believes Silver Lake will need "to pick up some new LPs."

Silver Lake Partners targets investments in large technology companies and has backed businesses such as semiconductor company Avago Technologies Ltd. (AVGO), travel-services company Sabre Holdings Inc. and memory-storage company Smart Storage Systems Inc. as well as social commerce companies Groupon Inc. (GRPN) and Zynga Inc. (ZNGA).

Last year, the firm teamed up with Kohlberg Kravis Roberts & Co. and Technology Crossover Ventures to invest in The GoDaddy Group Inc., a Scottsdale, Ariz., Internet-domain-registration group.

Silver Lake declined to comment.

(Dow Jones LBO Wire covers buyout and growth equity deals, as well as private-equity fund-raising and other news of interest to the private-equity community.)

-By Laura Kreutzer, Dow Jones Private Equity Analyst; 978-621-5708; [e-mail]