✒ Silver Lake and Thoma Bravo together held 75% of SolarWinds at the end of September, and they offloaded 5% of the software company at a price of $21.97 to Canada Pension Plan Investment Board, a $315m stake.
Six days later the US government issued an announcement warning that hackers had hijacked one of SolarWinds’ products, sending the company’s share price down to around $18, an immediate unrealised loss of 15% for the Canadian pension fund.
The private equity firms have clarified in a joint statement that they “were not aware of this potential cyber-attack at SolarWinds prior to entering into a private placement to a single institutional investor on December 7”. Such timing of sale is unlikely to be problematic because, as John Coffee pointed out, legal questions only kicks in “if you possess, at the time of the sale, material non-public information.”
Despite that, the incident could be embarrassing to the private equity firms since the Canadian pension fund has been one of the long-standing backers of the firms committing billions of dollars to their investment funds.