Private equity firms keep raising money, but where is it going to go?

March 3, 2008 | Matt Marshall | Comments |

silverlake2.jpgSilver Lake Partners, a Menlo Park, Calif. buyout firm that bought Seagate, Flextronics, Gartner and other companies before turning them around, has finished raising its third fund at $9.3 billion in capital, according to LBO Wire (no link). It’s much larger than the firm’s previous fund, raised in 2004, of $3.6 billion.

The pace at which the private equity industry keeps raising money is astonishing. The amount of capital swashing around among the world’s investors is huge, and these investors have little choice but to earmark it for various asset classes, such as stocks, bonds and alternative investments — including private equity.

Here’s a piece suggesting there are dark clouds gathering on the private equity industry: “At issue is nearly US$1 trillion that is not producing any returns, and the numbers are expected to reach even higher levels.”

silver-lake-partners-old.jpgAlso, Silver Lake has undergone a rebranding. It has lost its initial logo, which looked very similar to the old logo of high-profile venture capital firm Kleiner Perkins (which had been an investor in Silver Lake in previous funds through another partnership, Integral Capital Partners). That may be because Roger McNamee, an initial partner at Silver Lake with close ties to Integral and Kleiner, has since left the firm. Kleiner itself has also refashioned its home page in recent months.

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Matt Marshall is editor and CEO of VentureBeat. Follow him on Twitter at @mmarshall, and follow VentureBeat on Twitter at @venturebeat.

  • It is strange to me that the limited partner community continues to pour money into private equity funds. As many investors often do, the LPs are looking at historical returns to justify continued investment in the sector. But with the sub debt markets almost shut down, and with a 750 basis point spread between high yeild and treasuries, it is hard to imagine the buy out market doing well in the next 5 years. I recently put together a set of slides (for some of my limited partners) on why VC is a much better bet over the next 5 years. If interested, you can see the slides on my bio (william quigley)on the Clearstone web. sitehttp://www.clearstone.com/content/html/about-team-profile.htm?a=10