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Dell sinks $100M into Red Hat

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Dell invested his own money in the Raleigh Linux software developer, taking the largest single chunk of $600 million in debentures offered by the company in January 2004.

The investment was made by investment firm MSD Capital LP, which deploys an estimated $10 billion of Dell's personal wealth in public companies, private investments and real estate. The investment firm was given Dell's initials - MSD - as its name.

"It is certainly a good endorsement for Red Hat," says Katherine Egbert, an analyst with research firm Jefferies & Co. "Question (for Red Hat) is, did (Michael Dell) himself write a check, or is there a third party that wrote a check," says Egbert, referring to the possibility that investment managers - and not Dell - identified Red Hat for purchase.

Todd Fogarty, a spokesman for MSD Capital, declined to discuss the Red Hat investment but pointed out that 70 employees work for the New York investment firm. "It is our policy not to talk about investments," Fogarty says. A Red Hat spokeswoman did not return phone calls seeking comment.

Egbert notes that Dell Inc., which is based in Round Rock, Texas, resells Linux software on its servers and was an early investor in Red Hat.

The analyst does not see the purchase as a signal that Dell - neither the person nor the company - is interested in acquiring Red Hat. "Dell has never bought a software company," says Egbert. Neither Egbert nor her family own Red Hat shares, and Jefferies & Co. does not have an investment banking relationship with Red Hat.

Dell, a college dropout who is now 40, built a giant computer business by assembling computers and selling them directly to customers. His personal worth is estimated at about $16 billion by Forbes magazine.

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