Billionaire Michael Dell, founder of the world's largest computer manufacturer, and a stalwart of the Windows/Intel alliance, has made a $99.5m investment in Linux vendor Red Hat.

The investment was made in January 2004 through Michael Dell's investment company MSD Capital, according to an SEC filing. The transaction involved debentures that could be converted into 3.9 million shares of Red Hat stock.

Given the current 177 million outstanding shares, Dell could acquire a 2.2 per cent stake in the Linux vendor. Michael Dell was the largest single buyer from a bond totalling $600m.

Dell, at which Michael Dell acted as chief executive until March 2004, has a distribution agreement to bundle the open source software on its systems.

MSD Capital was created to manage Michael Dell's assets. According to business magazine Forbes, the entrepreneur has a net worth of $16bn.

Although there is no relation between MSD Capital and Dell, analysts view the deal as an endorsement for Red Hat.