Monday, July 9, 2007

Intel Capital Makes Fantastic Investment - Buys Into VMware IPO

Intel Capital steps up to an interesting and brilliant investment by buying a 2.5% stake of VMware in their coming IPO. Intel Capital will invest $218.5M into VMware and take a seat on the board. Excellent coverage of the news can be found at Data Center Knowledge and at Intel.

Simply.

Brilliant.

Rich Miller at Data Center Knowledge notes that the VMware IPO is expected to raise $741M, with shares priced between $23 and $25. Simple math says that if Intel Capital pays $218.5M for a 2.5% stake, then they have valued VMware at a cool $8.74B. That is a perfectly reasonable valuation for VMware, given that they are now in the elite few software companies with >$1B annualized revenue run rate.

From my perspective, this is fantastic news for Intel Capital. This one investment will easily return 3-4x for them in the next 5 years. That's a seriously big return on a very large investment. Congratulations to the Intel Capital team for landing this one!

I've written about the VMware IPO previously here and here.

I'd love to get a guaranteed price at the low end of the VMware IPO range. VMware folks: You have my number. Call me!

Tags: brianberliner, Brian Berliner, VMware, IPO, EMC, Intel, Intel Capital

4 comments:

  1. [...] that the will put in $218.5M to buy a 2.5% stake of the VMware IPO for a mere $23/share. When I wrote about it, I speculated that Intel Capital should expect to get a 3-4x return on that investment over the [...]

    ReplyDelete
  2. [...] pre-sold over $368M of the proposed 10% to Intel Capital and Cisco (see these [...]

    ReplyDelete
  3. [...] pre-sold over $368M of the proposed 10% to Intel Capital and Cisco (see these [...]

    ReplyDelete
  4. [...] that the will put in $218.5M to buy a 2.5% stake of the VMware IPO for a mere $23/share. When I wrote about it, I speculated that Intel Capital should expect to get a 3-4x return on that investment over the [...]

    ReplyDelete