After HFs, Blackstone Tries VC

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Blackstone hints at a venture capital unit in this week’s earnings call. Stephen A. Schwarzman, Blackstone co-founder, now follow his peers – KKR and TPG- into an another asset class. Early in their founding cycle, Airbnb and Uber received TPG’s money and most recently, Lyft got money from KKR.

No should ever doubt Blackstone performance in leveraged buyouts. In fact, Blackstone has also been successful applying private equity strategies to real estate under the guidance of Mr. Jonathan Gray.

Unfortunately, private equity firms have not been successful in other alternative assets, such as hedge funds.

In the past several years, private equity firms – KKR, TPG, and Carlyle – have shut down some or all of their hedge funds. In December 2016, Blackstone ended its $1.8 billion hedge fund, Senfina.

Now Blackstone may be successful in venture capital- it has venture veteran Jim Breyer on its boards – but time will tell.

TPG Flipping Off Intel

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TPG sold part of its interest in Intel Security to private equity firm, Thoma Bravo. On September 7, 2016, TPG’s Manta Holdings agreed to pay Intel $3.1 billion for a majority interest. Between then and now, TPG sequently sold part of its interest to Thoma Bravo, for an undisclosed amount, while still maintaining majority control over Intel Security.

On September 20, 2016, Thoma Bravo closed its Fund XII, that’s focused on software and technology companies. With a commitment of $7.6 billion, Fund XII plans to acquire between ten and twelve companies; making investments of between $200 million to $1 billion per acquisition.

Thoma Bravo’s Fund XII will adopt a “buy and build” strategy and hopes to exit investments through a sale or public offering.

It was not disclosed if Fund XII participated in the Intel Security deal, but Thoma Bravo did succeed with a similar investment when it sold Blue Coat to Bain Capital for $2.6 billion in 2015. Eventually, Bain Capital “flipped” Blue Coat again with its sale, last year, to Symantec for $4.65 billion.

It possible, TPG is looking to Thoma Bravo for the same magic. Last year, TPG agreed to purchase Mediware from Thoma Bravo.

Update: Intel Security Unit

Intel is proceeding with the divestiture of its Security Unit to private equity firm, TPG. In the press release announcing the 4Q16 earnings, Intel confirmed the sale is still expected to close in the second quarter or by June 2017. TPG will be the majority owner after the transaction is completed. 

Per the 3Q16 10-K, Intel expects a gain from the sale. In addition, Intel will receive $1.1 billion from TPG. Shareholders must wait and see if they’ll get all or some of the $1.1 billion. Last year, Intel gave back $7.5 billion to shareholders in the form of cash dividends and stock repurchases.