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Silver Lake nears $15bn debt financing for Dell buyout

17 Jan 2013

computers_lrgSilver Lake is reportedly close to lining up about $15bn in financing for the take-private of US technology giant Dell, which would rank as the largest leveraged buyout since the financial crisis.

Banks including Credit Suisse, Royal Bank of Canada, Barclays and Bank of America could informally disclose terms to a small group of possible buyers of the bridge loan as soon as today, Bloomberg reported on Thursday.

The banks are informally sounding out debt investors to gauge whether they can package up and sell pieces of the debt in a syndication process once the deal is finalised, the report said, adding that a deal could be announced as soon as next week.

JPMorgan, Dell’s advisor, would also provide staple financing to the buyout group. The rest of the funds would come from Silver Lake and its limited partners, Dell itself or founder and CEO Michael Dell, who owns about 15 per cent of the company’s shares.

Those limited partners could reportedly include Singapore sovereign wealth fund Temasek and Canadian Pension Plan Investment Board (CPP), the $170bn retirement system.

CPP also backed Silver Lake’s buyout of Skype, while Temasek was a joint investor in Alibaba in 2011 when Silver Lake first invested in the Chinese ecommerce giant.

Dell’s stock market value reached almost $23bn on Tuesday, making a potential deal the largest since a Blackstone-led consortium bought semiconductor company Freescale in 2006 for $17.5bn.

Dell had a market value of about $19bn before shares soared 13 per cent on Monday following news of the deal talks, which were first reported on Monday evening by Bloomberg.

Dell has struggled in recent years amid competition from tablet makers such as Apple.

A take-private could give the company more room to overhaul its corporate structure and focus on data centre equipment as opposed to personal computers.

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