CPP Investment Board to take Blackberry private?

Thanks to the efforts of Bloomberg, Canadians have learned that our Canada Pension Plan is open to taking Blackberry (BB:TSX) private — likely with the support of its PE partner Silver Lake, should this morning’s market rumours out of Waterloo bear fruit:

Canada Pension Plan Investment Board’s Chief Executive Officer Mark Wiseman said he would consider an investment in BlackBerry Ltd. if the smartphone maker decided to go private.

“It’s safe to say that any large deal in Canada or elsewhere is something that we would make sure we took a hard look at,” Wiseman said in a phone interview today when asked about BlackBerry. “You could say that about that asset.”

Canada Pension has invested and benefited from technology companies in the past. It more than tripled a $300 million investment in Skype Technologies SA in two years before selling the stake in 2011 to Microsoft Corp. (MSFT) The Toronto-based fund manager had invested in Skype with private-equity firms including Silver Lake Management LLC.

BlackBerry is considering going private as a way to turn the company around, Reuters reported earlier today.

This news comes on the heels of yesterday’s IDC report, which advised that Blackberry’s market share had fallen behind that of the lowly Windows phones. Which will not have come as a surprise to our readers (see prior post “Throwing in the towel on my RIM shares part 3” July 11-13).

I’m not sure what it is about being private that would “fix” Blackberry, or how the glare of being a public company slowed down the development of a fast browser over the past seven years. I’d offer that being public for close to 20 years, with the access to capital and associated publicity, has been a Godsend — up until recently at least. But that’s not to say that Mike as CTO couldn’t pull something off. I’d love it if he tried.

According to the Bloomberg story, CPPIB’s interest in a Blackberry deal is natural, given our fund’s earlier success with Skype (see prior posts “Skype deal: is it a tech or infrastructure deal?” Sept. 2-09 and “Our Skype NAV just got a lift” Sept. 24-10). What Bloomberg failed to mention, and through no fault of theirs since CPPIB hides this info from the media (see prior post “12 questions CPP Investment Board won’t be answering on BNN today” Jan. 17-13), is that CPPIB has had more high profile failures in its direct PE Tech deals than successes.

CPPIB’s direct investment in Sunguard appears to still be underwater. As is the take-private, go public deal we did of chip-maker Freescale Semiconductor (see prior post “Freescale IPO confirms CPPIB’s large paper losses” May 27-11). In fact, if you throw in the losses on our direct buyout of EMI and TXU, it is likely that whatever we made on the much-promoted Skype success was washed away by these other names; at least to date. Not that this warrants media coverage, mind you (see prior post “Why so uninquisitive about the CPP Investment Board, ROBers?” Mar. 3-13).

Whatever we do on Blackberry, let’s not base that investment decision on flipping Skype to Microsoft for US$8.5 billion or thereabouts. Skype had operating income of US$1.4 million in the six months before it filed to go public (see prior post “Quick uptick on Skype?” Aug 10-10).

Not every tech investment turns out to be a winning lottery ticket, as any VC will attest.

MRM