Russian hacks weigh on private equity’s software investments


(Reuters) – Some of the world’s biggest private equity firms, including Blackstone Group Inc, Silver Lake Partners LP and Thoma Bravo LP, own major stakes in the software firms whose shares dived on news that they were breached by Russian hackers.

Shares in SolarWinds Corp, which is controlled by Silver Lake and Thoma Bravo, were down more than 5% on Tuesday, after the information technology services provider said on Sunday that cyber spies hid malicious code within the body of legitimate software updates.

SolarWind’s stock has slid 20.8% from last week’s close.

Reuters reported that Russian hackers hijacked the SolarWinds software updates to break into multiple U.S. government agencies. Moscow denied having any connection to the attacks.

Following the plunge in the shares, Silver Lake’s nearly 40% stake in SolarWinds is worth $2.3 billion, while Thoma Bravo’s 33% stake is valued at $1.9 billion. They are still within the black, as each had invested $1.2 billion within the $4.5 billion buyout of SolarWinds in 2016. Silver Lake and Thoma Bravo have also earned $194.6 million and $234.67 million, respectively, from secondary stock sales since they took SolarWinds public in 2018.

Silver Lake declined to comment. Thoma Bravo did not respond to a request for comment.
In November, Blackstone led a $400 million investment in cybersecurity firm FireEye Inc, with ClearSky, a cyber security-focused investment company , joining as co-investor.

FireEye shares dropped quite 11% earlier this month after the corporate said hackers stole an arsenal of internal hacking tools wont to privately test the cyber defenses of its clients.

FireEye has contracts across the U.S. national security sector and other allied countries.

Following the breach, FireEye agreed to amend the deal to make it more favorable to Blackstone and ClearSky, according to regulatory filings. The FireEye preferred stock they stood to receive, paying a 4.5% dividend, would be converted into common shares at $17.25, not $18 as previously agreed. FireEye shares were trading on Tuesday afternoon around $13.58.


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