SAN FRANCISCO – Would you believe that the first deal done by hot-shot technology buyout firm Silver Lake Partners LLC involves no technology risk?
According to Glenn Hutchins, one of the firm’s founders, Silver Lake’s $75 million all-equity investment in Submitorder.com this past December is all about warehouse building, box handling, phone answering and inventory managing, relegating the high-tech part to the company’s clients.
Submitorder, based in Columbus, Ohio, outsources “e-fulfillment” tasks for e-commerce companies, meaning the company provides support services that help deliver products to customers who click on the “submit order” buttons on e-commerce Web sites. Silver Lake’s investment gives the firm control of the company. Hutchins said Submitorder will be used as a platform to build a major e-fulfillment concern that eventually will be taken public. He said much more capital will be spent on the company, and that Silver Lake will arrange for debt financing in the future, as well. “This company could well take billions more” in financing, Hutchins said. “This deal is just the first round of investing.”
Silver Lake closed on its debut fund last year, rounding up $2.2 billion in a matter of weeks. The firm has strong ties to top-shelf Silicon Valley venture capital firms, which Hutchins said will aid in securing customers for Submitorder. The firm is one of a number of efforts launched last year to look for large control investments in the technology sector, including Thomas Weisel Partners, which will hold a final close on $1.25 billion this month.
Hutchins, a former Blackstone managing director, said e-fulfillment is one of a number of “investment themes” his firm has identified. He declined to specify the other themes. “Stay tuned,” he said.