Interview: Founder of Elevation Partners and Silver Lake Partners
>> let’s keep our focus on technology. while investors fleshed out which companies will make the best investments, our next guest is a private equity investor looking for the next best acquisition. roger mcnamee, founder of elevation partners and silver lake partners. elevation is a buyout firm specializing in technology. roger joins us from the pacific crest technology conference in vale, colorado, to tell us where he’s focusing efforts right now. nice to see you again. you narrow this very wide universe down. i want to focus on movies, music and video game assets. i know one of your funds is looking to make deals in this particular space. where specifically are the best opportunities here in your view?
>> keep in mind, as a private equity investor, we have a long time horizon, we’re looking at things we will own up to 10 years. so you’re looking for situations where there is something that wall street doesn’t recognize today that we can either fix right away or fix over a period of time in partnership with the management team. so if you think about the technology universe broadly, there are two classes of investments. one is looking at the application of technology. that is what elevation does. when we look at the entertainment content industry, whether video games, music or online content, we’re looking for companies that wall street doesn’t like that have good brands and pretty good businesses with good management teams where, by looking out seven to 10 years, we can get a great return for investors. silver lake does the same thing with core enterprise technology and it has been very active in the past year with deals like sungard, that have been fundamentally about dealing with mature enterprise technology businesses that for one reason or another wall street doesn’t value as highly as we believe they will be valued in years to come.
>> can you focus in movies, and video game assets, you’re finding attractive assets. coming out of the disney conference call, the c.f.o. saying they’re evaluating strategic alternatives in radio, saying a number of parties are interested in radio assets. how attractive is radio these days?
>> i think it’s very attractive for disney. for us, that’s not our focus. our point of view is that the thing that you notice about all major media companies is that the basic business is distribution. you have movie studios like disney that also own television broadcasters, companies with cable assets and radio, those are distribution businesses. our view is that over the last 40 or 50 years, that was the mace to be. but technology is reducing the value of distribution so bee think the―we think the right strategy is to focus only on the content, on intellectual property businesses, that’s why we’re looking at music copyrights and video game copyrights and online businesses where we can directly own the content and technology’s commoditization of the distribution works in our favor.
>> how much more money are you finding is available? how much more interest in your fund? i ask this in the context of the big deals we’re seeing and people trying do deals in the past six months or so seem to be private equity money.
>> i think there are a couple of reasons. in our case, we’re a new fund and have yet to make our first investment and it’s a new group of people working together for the first time. we were very fortunate, the investors, many knew us from silver lake and have given up commitments of $1.8 billion which we hope to invest over five years but will only make between eight and 10 investments. it’s very narrowly focused. the money is there for strategy with a long-term focus and high rate of return. what you also see is more traditional private equity districties―strategies, similar to what thomas lee did with warner music where they are trying to make as much money as investors in the strictest period of time as possible and that strategy is working very well.
>> can’t talk about technology this week and not mention baidu.com. did the bankers do it wrong? did they price it wrong? does it bring us a new paradigm as as far as the pricing of i.p.o.’s?
>> i wish i could say yes, but i’m convinced the answer is no. with respect to the bankers, i can’t imagine how they would have priced it any better than they did. obviously, they could have priced it higher. what you had here was an i.p.o. with a small number of shares sold to a huge group of buyers desperate to own it at any price. baidu’s opening price was high relative to others in the category. i don’t think you can fault the bankers. more than anything, it’s a glimmer of the past rather than a look at the future. i don’t think there will be very many deals that are as crazy as that one but it reminds you that there are eliminates of 1999 that won’t go away.
>> roger, thanks so much.
>> my pleasure.
>> roger mcnamee joining us from vale. we’ll take a quick break and return. federal reserve policymakers raising the benchmark rate today for the 10th straight time. will there be future increases? that story straight ahead.
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Interview: Chief Financial Officer of ATP
>> crude oil retreated from a record after climbing as high as $64.27 a barrel. refineries in texas and illinois that suffered shutdowns resumed production of fuel. here’s your closing price down 1.4% to $63.07 per barrel. oil up 41% compared with a year ago price. now among other energy movers today, declines as well for gasoline, down 1.9%. heating oil down .7%. natural gas futures down .4%. oil production in the gulf of mexico had been threatened by hurricanes last month but platforms survived with little production losses. a.t.p. oil & gas is affected by that. they concentrate on proven undeveloped resevens with heavy concentration in the gulf. what is the outlook for supply and demand today? well, for that we turn back to the energy conference going on in denver. now we are joined by the chief financial officer of a.t.p., albert reese.
>> good to be back on bloomberg.
>> nice to talk to you again. when we last spoke you said there is little extra supply available. i’m curious given that price vs. moved up since our last conversation, give us an update of the supply equation right now
>> i think you will find supply staying about where it was when i talked before. the new energy bill, they’re trying to focus oned a supply through alternative energy, things of that nature. the oil and gas supply is not there. we heard a presentation at lunch today and what they showed was continued smaller and smaller fields found over time.
>> what does that mean for your company?
>> well, from our company it means we have more and more opportunities. as you mentioned before, we concentrate on fields that have proven yet undeveloped fields. in this case we are looking for fields that have been explored. for some reason they decided not move forward with the development of those hydrocarbons. what it does is give us the ability to acquire those and bring those projects to development as soon as we can. >> in terms of―when we spoke last time you were ramping up your time table trying to get the project you had in development online much sooner than you anticipated. how is that going? how much more production by year end? >> well, we are currently at about 54 million per day in the second quarter. we have just announced that we have been able to move forward at our largest project in the north sea. that’s a project that we are now working on diligently. our gomez project in the gulf of mexico, that’s a project we have recently announced. we have mobilized the production platform that we’ll move on there. and we’re headed toward about 160 million a day is our goal by the end of the year. that’s our challenge. effectively we’re looking at tripling production between now and end of this year.
>> albert, thank you.
>> thank you so much. good to see you again.
>> albert reese, c.f.o. of a.t.p oil and gas. it will be time for the “world’s biggest mover” segment today. that is the australian bond market .
