Buyout biggie Silver Lake lowers its sights

April 30, 2007, 6:27 PM UTC
Fortune

While most buyout funds are getting bigger, Silver Lake Partners, one of the first heavyweight firms to focus exclusively on technology, is broadening its horizons – by looking at smaller deals. Silver Lake manages nearly $6 billion in two funds, with signature deals like Seagate (STX), Nasdaq (NDAQ) and still closely held SunGard. Soon it will debut a mid-market fund, Silver Lake Sumeru, whose goal is to invest in companies typically too small for Silver Lake to consider. The fund will be headed by Ajay Shah, whose Shah Capital Partners is moving itself en masse into Silver Lake’s new and expansive Menlo Park, Calif., offices. The new fund aims to collect about $750 million, and bringing on Shah is a way for Silver Lake to go after different kinds of companies without distracting its exsisting big-game hunters. (Silver Lake took its name from a run at Deer Valley, Utah, where the original partners were skiing when they sealed their deal. As far as I can make out, Sumeru is a Hindu and Buddhist concept of a mountain in the center of the world. Mid-mountain. Get it?)

Silver Lake has been well documented in its relatively short existence. A guy named Serwer chronicled the firm’s founding in a 1999 article called “The Deal of the Next Century,” before Silver Lake started investing. I followed that with a piece in 2003, when Silver Lake decided to plunge back into buying tech. Don’t assume, by the way, that Silver Lake is ignoring the high end of the tech buyout market. On the contrary. It is busy raising its third fund, said to weigh in at $7.5 billion. That’s peanuts compared to the $20-billion fund Goldman Sachs (GS) just raised, but large for a tech-only operation. The Silver Lake boys are all hush-hush, by the way, about all of this. Not all of their investors are. The Indiana Public Employees’ Retirement fund, for example, recently announced its $50-million investment in Silver Lake Partners III.