What is Silver Lake worth?

May 01, 2012

FORTUNE -- Yesterday we wrote about how The Carlyle Group has received annual "valuations" from the California Public Employees' Retirement System (CalPERS), ever since selling a 5.5% equity stake to the pension system in 2001. But Carlyle is not the only unlisted (for now) private equity firm to have sold a piece of itself to CalPERS.

Silver Lake Partners, the tech-focused firm known for deals like Skype and Seagate, sold a 9.9% equity stake to CalPERS in the middle of 2008. The investment was reported to be worth $175 million at the time, although subsequent CalPERS disclosures put it just a few million dollars lower.

Through the end of last June, the investment was worth $329.74 million, according to the pension system's latest investment report. That would have put Silver Lake's enterprise value at approximately $3.33 billion. That's nearly double the 2008 figure, and 36% higher than June 30, 2010.

But there is that pesky lag with CalPERS reporting, which means the $3.33 figure is already 10 months old.

So, to get a more accurate understanding, let's look at what's happened to the market caps of three publicly-traded private equity firms -- Apollo Global Management (apo), The Blackstone Group (bx) and Kohlberg Kravis Roberts & Co. (kkr) -- during that 10-month span.

On average, the value of each firm has fallen nearly 19% since the end of last June. If applied to Silver Lake, that would put its current value at around $2.7 billion.

This is hardly a perfect calculation, given that: (1) Silver Lake is almost entirely focused on private equity, while firms like Blackstone have several businesses that actually are larger (like real estate); (2) Public market valuations of PE firms are poorly-constructed (more on that Thursday); and (3) The Carlyle Group is expecting to price just around 8% lower than its latest CalPERS valuation -- still a decrease, but not nearly so steep.

So $2.7 billion is our current market cap for Silver Lake, albeit with several important caveats. So just consider it a benchmark if Silver Lake ever does consider a dip into the public equity pool.

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