Silver Lake, a major tech-focused private equity firm, has made its latest investment in Splunk Inc (NASDAQ: SPLK), a company whose software is used for analyzing large amounts of data.

• Silver Lake will invest $1bn in Splunk in the form of convertible bonds. Splunk says it’ll use some of the money to help expand its business and some for share buybacks. The company has authorized a new $1bn buyback program that’ll be executed over time.

• Under the deal terms, Silver Lake will purchase convertible notes with an initial conversion price of $160 per share, a 30% premium to Splunk’s volume-weighted average closing price over 10 days as of Monday.

• Also, Silver Lake is getting a board seat at Splunk that’ll be occupied by its Managing Partner Kenneth Hao. 

• It seems Silver Lake spotted a good opportunity in Splunk, whose stock had sunk by 35% over the past year. The firm’s investment is apparently a nice validation as Splunk’s stock closed up 11% on Tuesday, the day it was announced.

• Over the past few years, Splunk has been transitioning its business away from on-premise software into cloud services. A bit late into the cloud market, it faces tough competition there and that has been a major reason for its stock not faring as well as many tech stocks these days.

• In its most recent fiscal quarter ended April 30, 2021, Splunk brought in $502mn in sales, up 16% year-over-year. It wasn’t net-profitable (has been that way for long), reporting a $471mn net loss in the quarter.

• With $75bn in assets under management, a $1bn bet on Splunk by Silver Lake isn’t out of the norm for the firm. As one of the biggest tech investors, Silver Lake currently has valuable stakes in public tech companies including UiPath, Unity Technologies, Peloton, and Twitter. 

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