Flush with cash, private-equity firms are flocking to the
Silver Lake, based in Menlo Park, Calif.,
said this month that it raised $15 billion in capital for a
tech-focused fund, exceeding its $12.5 billion target.
Private-equity dealmaking in the sector is accelerating, with a
record 184 transactions in the first quarter up 26 percent from
the same period a year earlier, according to
451 Research, an information technology research and
The tech industry is seeing a shift in its capital source -
from venture capital to private equity - as fundraising in the
latter market booms, according to alternative asset research
firm Preqin. Forty percent of investors surveyed by Preqin plan
to increase their investment in private equity this year.
An increasing number of tech-related companies have
moved beyond the traditional territory of venture capital
funds, and the sector as a whole has increasingly become a
target for the wider private equity industry, Christopher
Elvin, head of private equity at Preqin, said in an email.
Silver Lake is now the manager of the largest tech-centric
private-equity fund ever raised, a title once held by
private-equity firm Vista Equity Partners, whose sixth fund
attracted $10.5 billion in late 2016, according to Preqin.
As for the wider fundraising boom, Elvin said that a record
1,908 private equity funds were seeking a combined $635 billion
from investors at the start of April. While the most in-demand
managers often see their funds oversubscribed, forty-five
percent of investors say its harder to identify
attractive investment opportunities in private equity compared
to a year ago, according to the 2017 Preqin Global Private
Venture Capital report. Only 5 percent believe its
easier, Preqin found.
most recent deal was the March sale of Vantage Data Centers
to a group of investors that included Digital Bridge, PSP
Investments and TIAA Investments, for undisclosed terms. Silver
Lake also hold stakes in large tech companies such as Alibaba
Group, Avaya, Broadcom, and Motorola Solutions, according to
the private equity firms website.
Vista, meanwhile, acquired
Infoblox, a tech security company, in November. The
firms portfolio also includes Cvent, Sovos Compliance,
and Superion, its website shows.
As for how quickly newly raised private equity capital will
be deployed in tech? Elvin said giant firms like Silver Lake
and Vista will take their time.
It is likely that these funds will not be able to
deploy their capital as quickly as smaller growth or venture
capital funds operating in the same sector, but there is no
indication that they should necessarily adopt a slower rate of
deployment than other buyout funds of a similar size,
Elvin wrote in an email.