The CPP Buys a Controlling Interest in Skype

Does buying the company get us a Skype number in this country?

The Canada Pension Plan – the people who reward you with a monthly stipend after a life of hard work – has joined a bunch of venture capital firms to buy a 65% stake in Skype. CPP’s contribution to the US$2 billion purchase from auction giant EBay is about $300 million. It might seem odd for a supposedly conservative pension fund to be taking a flyer on an internet communications play, but it isn’t really. The pension plan’s investing arm, CPPIB (Canada Pension Plan Investment Board), is a CDN$105-billion slush fund that has to put its money somewhere. Generally, it goes for “safe” long-term investments like utilities, office towers, and malls. But there are only so many of those around. For instance, it probably has a piece of half the buildings in downtown Vancouver. When you have that much money sloshing around you have to venture a little farther afield to find places for it. So, like most monster investment funds, CPPIB has always reserved a small proportion of its money for more “exotic” investments such as venture capital plays. In fact, some of its cash has dribbled to a few Vancouver venture capital funds over the years. What fascinates me, however, is that they went for Skype, which was generally considered to be a loser in the Internet communications game. EBay, which bought the voice over internet protocol (VOIP) system four years ago for $US2.6 billion, never could make money with it. But then, look at the partnership that bought it and make some guesses. Many of them are sharp Silicon Valley firms. Lead investor Silver Lake Partners, which is considered among the sharpest around, engineered the sale of Vancouver’s Crystal Decisions to Business Objects a few years ago. It probably also had a hand in BOBJ’s recent sale to SAP and conversion to SAP Canada. No doubt, they’ll flip it in a few years. But before they do, I hope they take care of one small thing. Maybe now that we have a big Canadian guy on board as a Skype owner, the mighty CRTC can be convinced to allow Skype to provide telephone numbers to Canadian users like they do in the US an d almost every other country on earth. More than 400 million people benefit from it this new form of telecommunication. But in Canada, apparently, we need protection from “foreign” companies like Skype. So does ownership, even partial, have its privileges?