Abu Dhabi sovereign-wealth fund Mubadala Investment Co. is making an investment in Silver Lake and contributing $2 billion to help the technology-focused private-equity firm launch a new long-term strategy, according to people familiar with the matter.
Mubadala will take a stake of less than 5% in Silver Lake, buying roughly half of what Neuberger Berman Group LLC’s Dyal Capital Partners purchased in 2016, the people said.
Under the new strategy, Silver Lake will have 25 years to deploy the capital and harvest any gains, allowing it to hold assets for much longer than the typical 10-year buyout-fund time horizon.
Silver Lake and the P.E. Industry
It couldn’t be learned what Mubadala is paying for the stake, what it values Silver Lake at or how much in total the firm intends to raise for the new strategy.
The twin investments represent a vote of confidence that will give a boost to a big expansion that is under way at Silver Lake as the firm seeks to capitalize on a surge in interest in tech investments. It has been one of the most active investors since the coronavirus pandemic began, striking billions of dollars worth of deals with companies including
Airbnb Inc. and
Expedia Group Inc.
Silver Lake is separately close to completing fundraising on a new flagship fund and had collected more than $18 billion for that vehicle as of Aug. 14, according to a regulatory filing then. It is replacing a $15 billion pool raised in 2017. The Mubadala-backed strategy initially will co-invest alongside the flagship fund to build up a portfolio of investments but also will be able to do its own deals, the people said.
The new business line will offer Silver Lake a broad mandate to invest in debt and equity and across various geographies and industries, the people said. It may make investments in fast-growing upstarts or do traditional leveraged buyouts of more mature companies.
With headquarters in Menlo Park, Calif., and New York and more than $60 billion in assets under management already, Silver Lake has a longstanding playbook of taking large stakes in technology and media companies including computer-maker
Dell Technologies Inc.
and entertainment firm Endeavor Group Holdings Inc. and working closely with their founders or management to help spur growth.
There has been a broader industry shift in favor of what is called perpetual capital—pools of money that firms don’t need to constantly refresh at great effort and expense. At 25 years, the new strategy could last for the entire remaining investment career of Silver Lake’s new co-chief executives, Egon Durban and Greg Mondre, both in their mid-40s.
Private-equity rivals including
Blackstone Group Inc.,
Carlyle Group Inc.
and CVC Capital Partners also have been developing long-term strategies, although most of those funds have a lifespan of around 15 years. They tend to pay up for businesses that are stable and have steady cash flows and aren’t fixer-uppers, giving them annualized return expectations of 12% to 15% versus the 20%-plus touted by traditional buyout funds.
Silver Lake’s 2013 flagship fund—the most recent vehicle with meaningful performance data—had returns net of fees of 23% as of March, according to public pension-fund records. The firm isn’t lowering its return expectations for the new strategy, according to people familiar with the matter.
For Mubadala, which manages $232 billion, the partnership with Silver Lake may represent a strategic shift for its technology investments. Mubadala was a key backer of
SoftBank Group Corp.’s
Vision Fund, committing $15 billion to the $100 billion vehicle. But it privately has complained about the high valuations at which SoftBank made its investments and subsequent losses in the fund.
Mubadala’s relationship with Silver Lake dates back years. The sovereign-wealth fund invested in William Morris Endeavor Entertainment in 2012, the same year Silver Lake took a stake in the company. In 2013, Mubadala said it was investing alongside the private-equity firm in WME’s acquisition of IMG Worldwide, forming what is now known as Endeavor.
In 2019, Silver Lake invested $500 million for a minority stake in City Football Group, the owner of soccer clubs including the English Premier League’s Manchester City. Mr. Durban joined the board of the company, which is chaired by Mubadala CEO Khaldoon Al Mubarak.
Mubadala also participated in the $2.25 billion funding round for
self-driving car unit Waymo LLC that Silver Lake led in March, as well as in the firm’s subsequent investment in Indian tech-and-telecom giant Jio Platforms Ltd.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
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Car Insurance for Canadian
Car insurance is vital, like snow days and maple syrup. Part of the Canadian experience. Not all countries need insurance policies by regulation as Canada does; the concept of a pay-as-you-go fuel tax has also been used as a substitute for traditional auto insurance in some areas. But, no matter how important it is, investing in the service is never the wrong decision. Insurance will save motorists from the economic burden of the ultimate inevitability of the road: accidents. They’re going to happen to everybody, no matter their experience or ability. Driving, like every other aspect of human life, is naturally a human mistake.
Also, the most experienced driver can be distracted in our current driving climate. With a reputable insurer, financial stability is only one thing to think about. Between the radio, the billboards, and the careless children thrashing around in the back seat, a few minutes on the road will provide more means of diverting someone’s attention than a few hours in front of the TV. All it takes is a misconstrued stop on a slippery day or a neglected shoulder search to cause thousands of dollars of harm to your property or the property of others. If the accident’s cost exceeds the price of the vehicle that caused it, auto insurance will save the driver from financial ruin. The protection in an appropriate strategy protects drivers in ways that the airbag has never been able to do.
The security provided by insurance is so vital that it has been obligatory for any Canadian who hopes to get behind the wheel. However, some jurisdictions offer consumers a preference as to who is protected by their auto insurance. Coverage is always mandatory, but the strategy is malleable. The right of motorists to monitor their plans and coverage does not end with the business either. Car insurance premiums are affected by a variety of factors. While some of these items are beyond the control of motorists, such as age and gender, they can still make many choices to lower their prices. Choosing a reliable vehicle, traveling shorter distances, and having fewer tickets are items drivers can do to keep their car insurance premiums as low as possible.
Some drivers, particularly new ones, are wary of individualized rates – paying different amounts for other people. Insurance firms, though, are not swindlers or profit-seekers. They’re just trying to keep auto insurance prices as reasonable as possible. A car that leaves the garage twice a week is less likely to have an accident than a car that goes twice a day. Station wagons are more comfortable to fix than imported sports cars. Every person has different driving habits, so it only makes sense to have a foreign car insurance policy. Acquiring a car insurance policy is more than just making a deal; it is the start of a friendship that will help the driver out in the toughest of times.
Some provinces in Canada, where motorists have too many car insurance options, any additional information could save the insured motorist thousands of dollars. It pays to be updated. The right strategy will keep you safe when anything else doesn’t matter where you’re in Canada.
When it comes to investing, don't believe everything you see on TV – TheChronicleHerald.ca
Interest in investing is hitting new highs. Discount brokers are flooded with applications and trading volumes are surging. Despite this renewed focus, some misunderstandings persist about the realities of investing.
To illustrate, let’s deconstruct an investment conversation that you might have with a friend, colleague, or advisor. It goes like this.
“A guy on TV says the economy is strong and stocks are going up. It seems like a good time to invest. I don’t see much downside so I’m buying high-dividend stocks for my RRSP.”
A guy on TV
Many investors think there are people who know where the market is going. Experts who know something the rest of us don’t. The reality is, they don’t. Their insights may be interesting and unique, but any conclusions related to market timing aren’t worth the cup of coffee you’re drinking. It’s impossible to call the market level a week, month or even year from now with enough consistency to be useful. Stock prices are determined by a myriad of factors, many of which we’re unaware of until after they’ve emerged.
The economy looks good. I’m buying.
At the core of most market calls is an economic forecast. This is unfortunate because the connection between what the economy is doing and where the stock market is going is flimsy at best. It’s true that economic activity affects corporate profits, which ultimately drive stock prices, but the relationship is sloppy and unpredictable. Consider the last decade — we had the slowest economic recovery in history and yet profit margins were at or near record levels throughout, as were stock prices.
It bears repeating. Mr. Market is not paying attention to today’s economic headlines. He’s focusing on what the news might be in 12 to 18 months. The corporations you’re investing in aren’t reading the headlines either. They’re too busy trying to move their businesses ahead.
A good time to invest
For an investor with a multi-decade time frame, anytime is a good time. Some points in time, however, will be more prospective than others. These are periods when returns are projected to be higher based on fundamentals like rising profitability, low valuations and/or extremely negative investor sentiment. To be clear, these factors won’t tell you what’s about to happen, but will provide a tailwind over the next three to five years.
Not much downside
When you own a stock, the range of possible outcomes is always wider than you expect. It’s hard to conceive of a holding going down 20, 30 or 40 per cent, especially when things are going well. Unfortunately, recent price moves have no predictive value, they just provide false comfort.
The future for a stock that has recently done well is just as uncertain as one that hasn’t. Indeed, it may be riskier because its price-to-earnings multiple is higher (if profits haven’t kept up with the stock price), its dividend yield is lower and shareholders’ risk aversion, a necessary ingredient for good returns, has melted into complacency.
The higher the better
We all love dividends, but too many investors choose stocks based solely on yield. This is a problem because yield is not a measure of value for a stock like it is for a bond. A company’s worth is derived from it’s potential to earn profits into the future. Dividends are simply the portion of those earnings that get distributed to shareholders.
Yield-obsessed investors often downplay the importance of the stocks’ second source of return — price appreciation. Ask yourself the question: What would you rather have, a $10 stock yielding five per cent that’s worth $8, or a $10 stock with a three per cent yield that’s worth $12?
If you want to focus on dividend income, start with a list of stocks that have an acceptable yield. From there build a diversified portfolio of holdings that are trading at or below what they’re worth.
In your RRSP?
When asked, “What should I do in my RRSP (or TFSA),” I have only one answer. The most important thing driving your RRSP strategy is the strategy you’re pursuing for your overall portfolio (including other registered accounts, taxable accounts, pensions and income properties). Anything you do in your RRSP has to roll up into your household asset mix. In that vein, RRSP contributions are a wonderful tool for adjusting your overall portfolio because transactions have no tax consequences.
Investing is hard enough without basing decisions on false premises. If you find yourself listening to someone pontificate about where the market is going, try to change the subject or look for an escape.
Tom Bradley is
chair and chief investment officer
at Steadyhand Investment Funds, a company that offers individual investors low-fee investment funds and clear-cut advice. He can be reached at
Copyright Postmedia Network Inc., 2020
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