Online auction giant eBay announced this morning that it has agreed to sell 65% of its stake in Skype to a group of investors in a deal that values the web communications service at US $2.75 Billion. eBay, which will retain a 35% equity investment in Skype, said it will receive US $1.9 Billion in cash upon the completion of the sale and a note from the buyer for US $125 Million.
The buyer group is led by private equity firm Silver Lake Partners and includes London-based Index Ventures, Andreessen Horowitz, a venture capital firm founded by Netscape co-founder Marc Andreessen, and the Canada Pension Plan Investment Board (CPPIB).
So what exactly is the CPPIB? And why did they invest in Skype?
Under the direction of then Finance Minister Paul Martin, the CPPIB was created in 1997 as an organization independent of the government to monitor and invest the funds held by the CPP. The CPPIB is a crown corporation created by an Act of Parliament. It reports quarterly on its performance, has a professional management team to oversee the operation of various aspects of the CPP reserve fund and also to plan changes in direction, and a board of directors that is accountable to but independent from the federal government.
David Denison is the current CEO of the CPPIB. According to their June 2009 Quarterly Report, about 43% of the fund’s assets are invested in securities domiciled outside Canada. This is up from 38% the previous year as Denison is actively trying to increase the fund’s foreign investment. In recent years, the CPPIB has also changed direction in its investment philosophy. It evolved from investing exclusively in non-marketable government bonds to passive index-fund strategies and, more recently, to active investment strategies.
An investment in Skype certainly falls under the active investment strategy category.