Silver Lake was labeled the 'Warren Buffett of tech' for investing billions during the pandemic. It's emulating Buffett again with its new 25-year strategy
Silver Lakeis launching a 25-year investment strategy, The Wall Street Journal reported on Tuesday.
- The private-equity giant is becoming even more like
Warren Buffettwith its longer investingtimeframe.
- Silver Lake has invested billions of dollars in
Airbnb, Expedia, and other businesses during the pandemic, similar to how Buffett handed cash to the likes of Goldman Sachs and General Electric during the 2008 financial crisis.
- The firm has also emulated Buffett by lending money at lofty interest rates and securing equity warrants.
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Silver Lake pulled from Warren Buffett's playbook when it injected cash into ailing companies during the coronavirus crash this year. The private-equity giant is emulating the famed investor once again with the launch of a 25-year investment strategy.
Abu Dhabi's sovereign-wealth fund,
Silver Lake, which manages more than $60 billion in total assets, has a quarter of a century to employ Mubadala's cash and realize any gains — more than double the usual 10-year timeframe for private-equity funds, The Journal said.
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Buffett, the billionaire CEO of
Silver Lake hasn't just adopted a Buffett-esque investment horizon, it has also taken up his mantle as the go-to investor in tough times.
It previously specialized in leveraged buyouts of companies such as Dell, Skype, and Broadcom. However, when the pandemic crippled the global economy earlier this year, it plowed billions into Twitter, Airbnb, Expedia, Alphabet-owned Waymo, and Indian telecoms group Reliance Jio.
However, the Berkshire boss took cover when
Silver Lake co-chief Egon Durban stepped into the breach instead of Buffett, identifying technology businesses in temporary trouble and bailing them out on lucrative terms for the firm.
For example, Silver Lake co-loaned $1 billion to Airbnb at an interest rate of over 10%, the Financial Times reported. It also received warrants it can exercise to purchase equity in the home-sharing platform at a $18 billion valuation — a fraction of Airbnb's $31 billion price tag in 2017.
Buffett dished out similar loans at hefty interest rates and secured stock warrants during the financial crisis. Indeed, the US government modeled its recent airline bailouts on the investor's deals in that era.
Given the similarities, it's no wonder that one banker described Silver Lake to Business Insider as the "tech version of Warren Buffett" earlier this year.
The pair have rarely crossed paths, as Buffett has historically avoided technology companies, especially those with sky-high valuations and no profits. However, Berkshire's recent bet on Snowflake's IPO suggests that could change soon enough.
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