Intel mulls over selling $1-bln assets of venture capital unit

By Staff Writer

Mar 14, 2016 02:40 AM EDT

The world's leading manufacturer of computer components, Intel Corp, is mulling over sale of $1billion worth assets from its venture capital (VC) unit Intel Capital. Intel has roped in UBS Group AG to find out potential buyers for the sale of a part in venture capital unit. The sale will enable Intel to focus on startups in technology space.

According sources on a condition of anonymity, the portfolio, which is being offered for sale, of venture capital unit Intel Capital comprises companies from all over the world. Intel Capital was undergoing restructuring exercise. Intel Capital in 2015 invested about $514 million in 143 companies mostly new ventures and follow-on investments.

Bloomberg first reported about the sale proposal of Intel Capital. After the retirement of Arvind Sodhani as President in January, Intel has restructured its venture capital unit. Sodhani served Intel for 35 years and has been replaced by Wendell Brooks, head of mergers and acquisitions. Intel in a statement said that the combination of teams would unify investment decisions across the firm. 

Since its inception in 1991, Intel Capital invested $11.6 billion over 1,440 companies in 57 countries covering several sectors such as digital media, security and wearable technology. Intel Capital's new President denied to comment on latest proposal of selling a part of venture capital unit. The sale proposal is a part of strategy change initiated by Intel Chief Executive Brian Krzanich, who assumed charged in May 2013 after the retirement of Paul Otellini, former CEO.

Otellini is the leading Intel Capital and one of the most active venture capitalists in the world. Intel Capital is investing in areas to enhance market for personal computers (PCs) that run on Intel chips.  The new sale proposal is expected to enable Intel Capital to focus more on startups in technology space in geographic areas including the US and China, as reported by The wall Street Journal (WSJ). 

Intel Capital made an investment of $740 million in Cloudera Inc during 2014. Cloudera Inc was a competitor to Hadoop, a big data software firm. Intel has its own version of Hadoop aside. Intel Capital also made an investment of $100 million in Mirantis Inc in 2015. Mirantis Inc sells subscriptions to the open-source cloud software OpenStack. Intel Capital is exploring sale of a part in the assets for some time.

Taipei Times further adds that negotiations on sale of part in Intel Capital are at primary stage. The sale proposal may attract private equity (PE) firms specializing in buying portfolios. These specialized PE companies are called as secondaries firms. The part of assets that would be put on the block is expected to be worth $1 billion.

Intel Capital's President Sodhani is nearing retirement. Wendell Brooks may take over the charge. According to Brookes, Intel Capital would go ahead with its investment plan of extending capital support in the range of $300-$500 million every year in startups. Intel's stock rose 51 cents to $31.76 after the sale news hit the market.

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