Dell re­builds com­pany, grows his wealth

San Antonio Express-News - - BUSINESS - By Tom Met­calf and Nico Grant

Michael Dell’s re­turn to the pub­lic mar­kets af­ter a pro­tracted ab­sence has helped make him $12 bil­lion wealth­ier.

The man who be­came fa­mous sell­ing com­put­ers more cheaply over a newish thing called the in­ter­net re­treated from Wall Street’s glare in 2013, delist­ing a com­pany in which he held a stake of just $3.8 bil­lion as sales of per­sonal com­put­ers sagged.

He re­built the com­pany, turn­ing maker of in­ex­pen­sive PCs into a di­ver­si­fied tech pow­er­house that sells ev­ery­thing from servers to se­cu­rity soft­ware. Now his hold­ing in Dell Tech­nolo­gies Inc., which listed on the New York Stock Ex­change last month, stands at $17 bil­lion, ac­cord­ing to cal­cu­la­tions by Bloomberg.

“Over the last six years, the com­pany has trans­formed into a $90 bil­lion es­sen­tial in­fra­struc­ture provider with out­stand­ing fi­nan­cial per­for­mance and a lead­ing port­fo­lio of end-to-end tech­nol­ogy so­lu­tions,” a Dell Tech­nolo­gies spokesman emailed state­ment.

The big­gest-ever lever­aged buy­out in tech also is prov­ing to be one of the most lu­cra­tive pri­vate eq­uity trans­ac­tions on record. Dell’s for­tune is now $27 bil­lion, ac­cord­ing to the Bloomberg Bil­lion­aires In­dex, a rank­ing of the world’s 500 rich­est peo­ple, up from $15 bil­lion in 2013. A spokesman for Michael Dell de­clined to com­ment on his net worth.

Dell’s wealth is man­aged by MSD Cap­i­tal, an in­vest­ment firm led by Glenn Fuhrman and John Phe­lan. Founded in 1998, MSD is re­garded as one of the most so­phis­ti­cated fam­ily of­fices, with the ex­per­tise and cap­i­tal to buy com­pa­nies and man­age in­ter­nal hedge funds. Some of its strate­gies said in an have been made avail­able to out­side clients through af­fil­i­ate MSD Part­ners. Dell’s mount­ing for­tune vividly il­lus­trates just how suc­cess­ful the bil­lion­aire has been in re­mak­ing his com­pany us­ing the pri­vate eq­uity play­book, with help from in­vestor Sil­ver Lake.

Along the way, he re­gained con­trol of his com­pany. When Dell Inc. was delisted, he held a stake of about 15 per­cent. Af­ter com­mit­ting an es­ti­mated $8 bil­lion of stock and cash dur­ing the pri­va­ti­za­tion, he now owns about half of the eq­uity and about three­quar­ters of the vot­ing rights.

Fi­nan­cial en­gi­neer­ing ex­plains some of the gain. Dell’s $67 bil­lion pur­chase of data-stor­age gi­ant EMC Corp. in 2016, then a record takeover for a tech firm, tripled the com­pany’s debt but helped it ex­pand into soft­ware and ser­vices. The EMC deal was mostly for cash, and the rest was paid through the new se­cu­rity linked to part of EMC’s in­ter­est in pub­licly traded VMware Inc.

The track­ing stock is­sued as part of the deal was meant to re­flect VMware’s value. But the se­cu­rity, known by its ticker DVMT, per­sis­tently traded at a dis­count to VMware.

That gap ef­fec­tively ac­crued to Dell’s own­ers, dis­may­ing some in­vestors in the track­ing stock. It meant in­vestors balked at Dell’s ini­tial of­fer to buy out share­hold­ers of DVMT and forced it to sweeten the bid to get the deal done.

That still left plenty for Michael Dell.

New York Times file photo

Michael Dell has padded his wealth by $12 bil­lion.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.