Silver Lake, the multi-billion-dollar tech-focused investment firm, is adding a long-term hedge fund backed by Abu Dhabi’s sovereign wealth fund, Mubadala, to its array of investment vehicles to finance technology companies.
The move into multi-strategy investing represents the diversification of financing vehicles that companies have at their disposal, and gives the private equity firm the tools it needs to compete in a world awash with capital and new ways for companies to access public market financing.
It’s probably not a coincidence that the public-private, long-only investment structure is happening as more tech companies are eschewing later-stage financing to find cash on public markets through things like special purpose acquisition companies (SPACs).
According to a statement from the firm, the new strategy has a 25-year deployment life cycle and can be invested across structures, geographies and industries. The agreement makes the two financial entities a couple that will really span time together.
In addition to the new strategy, Silver Lake’s partnership has a new minority shareholder in the Abu Dhabi-backed sovereign wealth fund. Mubadala took a minority stake in the firm by buying up half of the 10% chunk of the firm that Silver Lake’s partners sold to Dyal Capital Partners, a subsidiary of Neuberger Berman.
“Silver Lake is a top performer for Dyal, having innovated, evolved and expanded to prudently grow its assets under management from $23 billion when we first acquired our stake to more than $60 billion today,” said Michael Rees, managing director and head of Dyal Capital Partners, in a statement. “This transaction with Mubadala and their commitment to Silver Lake’s new long-term capital vehicle is a strong endorsement of Silver Lake’s differentiated, global capabilities and underscores our conviction in the ability to generate compelling returns by owning stakes in the world’s leading private investment firms.”
It’s not the first time that the two firms have hooked up. Mubadala is a co-investor alongside Silver Lake in the talent agency and entertainment giant, Endeavor; the autonomous vehicle technology developer, Waymo; and the India-based Jio Platforms.
The firm’s co-chief executives Egon Durban and Greg Mondre said in a joint statement that the new deal would allow the firm to capitalize on a wide range of investment opportunities, including ones outside of the mandates of existing funds.
“As an institution that has long seen the potential of investing in the technology sector, we are excited to partner with Silver Lake, one of the world’s most respected technology investors, to capitalize on major opportunities within and beyond the industry,” said Khaldoon Al Mubarak, managing director and chief executive officer of Mubadala, in a statement. “Technology is the bedrock of the global economy, and fundamental to all other sectors that are being significantly digitalized. Our goal is to be well positioned to take advantage of this accelerated digital transformation and its potential, and we believe Silver Lake is the right partner and that this is an optimal structure for us.”
Mubadala’s tech portfolio investments kicked off in 2007 with an investment in the chip manufacturer AMD and then through the creation of the semiconductor manufacturing company GlobalFoundries. It has also backed the medtech company PCI Pharma Services, and a number of ridesharing and e-commerce companies in Abu Dhabi and Silicon Valley, the company said.
The deal with Silver Lake could also be seen as a slap in the face for SoftBank — a longtime partner for Mubadala, which was an investor in the Japanese investment firm’s $100 billion Vision Fund and a $400 million European-focused investment vehicle which launched in February of last year.