Wanted: Sovereign Wealth Funds to Join Dell Deal

Mega U.S. buyout deals involving public investors in consortiums are a rare occurrence. Several large sovereign funds and public investors are keen on these types of consortium deals; however, they are stapled with unwanted public attention. In addition, if the investment sours, then public funds won’t hear the end of it in the media and board meetings. Dell Inc. is contemplating going private and has formulated a special committee to assess the best possible outcomes. Silver Lake Partners, a private equity firm, is trying to assemble partners for a consortium to take Dell private. The leveraged buyout price according to news sources was speculated to be at US$ 13 to 14 per share. This would make Dell a mega buyout. If Dell’s share price were to jump, then the future LBO consortium would have to pony up billions more burdening the company with excessive debt. As of January 22, 2012, Dell had a market capitalization of US$ 22.79 billion and an enterprise value of US$ 20.06 billion. Microsoft Corporation has expressed interest in some funding, possibly between US$ 2 to 3 billion. This would be a strategic investment for Microsoft, leveraging software and channel opportunities.

What do sovereign wealth funds and other long-term public investors think of the Dell deal?

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