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CalPERS takes Stake in Silver Lake

The pension fund has acquired stakes in several marquee buyout firms, the latest of which is the purchase of a 10 percent stake in the tech buyout giant.

The California Public Employees' Retirement System (CalPERS) appears as bullish as ever on the private equity industry, having added a 9.9 percent stake in Silicon Valley-based Silver Lake Partners to its collection of buyout firm ownership interests. The pension fund also boasts minority stakes in Apollo Management, The Carlyle Group and TPG Ventures, now called TPG Growth.

When the ?partnership? with Silver Lake was announced, neither the pension fund nor the buyout firm disclosed the price of the stake, though The New York Times cited several sources close to the deal as valuing the stake at $275 million. Under terms of the deal, a CalPERS representative will join the tech-focused buyout firm's advisory board.

?CalPERS' commitment to Silver Lake underscores Silver Lake's compelling track record as a leading technology-focused investment firm and a top performer in their fund vintage years,? Leon Shahinian, senior investment officer of CalPERS Alternative Investment Management Group, said in a statement. ?They have consistently demonstrated success in creating value for their investors, and our partnership is a natural progression of a mutually beneficial relationship dating from 1999 when CalPERS was an LP in Silver Lake's first fund.?

Glenn Hutchins, co-founder and co-chief executive of Silver Lake, said the investment will help the firm's growth. Silver Lake, which currently manages more than $16 billion, also said the investment would provide seed capital for future funds, the development of new alternative asset businesses and expand its ability to co-invest with its funds.

CalPERS has been snapping up stakes in private equity firms with greater frequency as firms increasingly look to institutional investors for large capital infusions that effectively help establish the value of a firm's management company.

In July, CalPERS paid $600 million for an 8.6 percent stake in Apollo prior to its listing on Goldman Sachs' private trading platform. In 2001, the pension purchased a 5.5 percent stake in Carlyle and the same year it took a $60 million equity stake in TPG Ventures, as did the California State Teachers' Retirement System and Oregon's Public Employees Retirement Fund.

Large US pensions were also reported last May to be mulling the purchase of a stake in TPG, though at the time a source told PrivateEquityOnline the possibility was at a very early, exploratory stage and ? should anything come to fruition ? TPG would likely sell a single-digit stake in line with industry precedents.