CPPIB consortium purchases Skype majority

The C$116 billion ($105 billion) Canadian Pension Plan Investment Board is part of an investor group led by private equity technology-specialist, Silver Lake, that has purchased a majority-stake in Skype Technologies from eBay, and “plans to build the company into a core internet franchise at huge scale”.

The consortium, which also includes Andreessen Horowitz, a recently launched venture capital firm led by Netscape founder Marc Andreessen and Ben Horowitz and Index Ventures, a premier
global venture capital firm, have purchased a 65 per cent stake for $1.9 billion. eBay retains the remaining 35 per cent, with the purchase valuing the company at $2.75 billion.

Andreessen was particularly upbeat about the purchase, calling Skype the archetypal internet phenomenon, a breakthrough technology combining with enormously powerful network effects to revolutionise a gigantic industry.

“With this acquisition we will work with the Skype team and eBay to build the company into a core internet franchise at a huge scale,” he said.

Mark Wiseman, senior vice president, private investments with CPPIB said the acquisition represented an opportunity to acquire a leader in the rapidly growing internet telecommunications market and one of the most strategically valuable internet brands in the marketplace.

Skype Technologies, which produces software allowing users to make free video and voice calls and low-cost telephone calls, generated revenues of $551 million in 2008, a 44 per cent increase for the year.

The CPPIB has had a relationship with Silver Lake since 2004 with $600 million invested in the Silver Lake Partners II and Silver Lake Partners III funds. Overall it has about 130 private equity investment funds.

The fund’s allocation to private equities is 11.8 per cent, with 45.7 per cent in public equities; 29.2 per cent in fixed income, 5.9 per cent in real estate, 3.5 per cent in inflation-linked bonds and 3.9 per cent in infrastructure.