Insight

Silver Lake, Warburg to make nearly 3x their money with IDC sale

-

Silver Lake and Warburg Pincus stand to nearly triple their investment with the sale of Interactive Data Corp, according to a source.

On Monday, the Intercontinental Exchange (ICE) said it would buy IDC for $5.2 billion. IDC shareholders will receive $3.65 billion in cash and $1.55 million in ICE shares.

As previously reported, ICE, along with Markit Group, submitted final bids for IDC. Nasdaq, which had been “fighting hard” for IDC, submitted an offer but was beat out by ICE, the Wall Street Journal reported.

IDC, based in Bedford, Massachusetts, provides financial market data, analytics and services to financial institutions and active traders. The company competes against Bloomberg LP and Thomson Reuters Corp.

Silver Lake and Warburg acquired IDC in July 2010 in a deal valued at $3.4 billion. The sponsors contributed $1.4 billion in equity, according to a November 2011 SEC filing. Warburg used its 10th fund to invest in IDC, while Silver Lake’s investment came from its third large-cap technology pool, the SEC filing said.

IDC has apparently paid out at least two dividends. In April 2014, IDC used $2.2 billion in loans to partly refinance debt and pay an estimated $273 million dividend to its equity sponsors, management and option holders, Moody’s Investors Service said.

Another distribution occurred in December 2012. IDC used $350 million in loans and $100 million in cash to fund a $440 million distribution to its sponsors, Moody’s said at the time. 

Warburg is currently out fundraising for its 12th global fund, which has a $12 billion target. The firm’s prior fund, Warburg Pincus Private Equity XI, closed at $11.2 billion in 2013. Warburg’s 10th fund launched at $15 billion in 2007 and generated an 8.81 percent net IRR and a 1.5x total value multiple as of March 31, according to the Washington State Investment Board.

The performance of Warburg’s 11th pool has improved. It produced a 20.87 percent net IRR and a total value multiple of 1.3x as of March 31, the WSIB said.

Silver Lake Partners III, which invested in IDC, closed at $9.3 billion in 2008. It produced an 18.33 percent net IRR and a 1.7x total value multiple as of March 31, the WSIB said.

Silver Lake is currently investing out of its fourth large-cap technology investment fund,which closed at $10.3 billion, in April 2013. Silver Lake Partners IV LP produced a 71.15 percent net IRR and a 1.7x total value multiple as of March 31, the WSIB said.

Silver Lake and Warburg declined to comment.