Private equity firm Silver Lake Partners aims to raise at least $16 billion from investors for its sixth flagship buyout fund despite prevailing uncertainties following the outbreak of the Wuhan Coronavirus, said sources familiar with the matter at hand.
Investing the money which will be raised in the coming months, will allow Silver Lake to buy companies at depressed valuations, given the toll the Wuhan Coronavirus is having on the global economy; this includes the technology and media sectors that the private equity firm focuses on, said sources.
Buyout funds typically return funds raised from investors after a period of 3 to 7 years – long after this pandemic is expected to have subsided. Nevertheless, concerns among institutional investors, including insurance firms and public pension funds on the available liquidity in the market midst the turmoil will be a key test for the buyout firms’ ability to raise funds during a crisis.
“Silver Lake is preparing to start raising the new fund, Silver Lake Partners VI, in the second quarter, amassing between $16 billion to $18 billion,” said sources who cautioned that plans have not been finalized yet and could change any time.
Sources preferred the cover of anonymity since the preparations are confidential.
Silver Lake declined to comment.
Silver Lake has $43 billion in assets under management, and its portfolio of companies includes social media firm Twitter Inc, Dell Technologies Inc as well as movie theater chain AMC Entertainment Holdings Inc, according to its website.
In 2017, Silver Lake had raised $15 billion from investors for its fifth buyout fund; this fund had an initial target of $12.5 billion, and as of the end of December 2018 it had delivered an internal rate of return (IRR) of 11%, according to the website of Minnesota State Board of Investment, one of Silver Lake’s investors.
Silver Lake Partners IV $10.3 billion fund, had delivered an IRR of 24.4% as of the end of December, according to the Minnesota State Board of Investment.
In comparison, the Minnesota State Board of Investment’s entire private equity portfolio delivered an IRR of 12.5%.