* Math is good: It's square root day! * Math is bad: The formula that killed Wall Street. * WSJ has an early sketch of how Treasury's public-private partnership program might work. Apparently the "bad bank" concept is dead -- replaced by a series of privately-managed funds that would be sanctioned and partially-funded by the feds. Still unresolved are the uber-important matters of pricing and risk-sharing. My initial questions: (1) If PE managers are being asked to participate, how will they raise new/big money from cash-strapped LPs? (2) If a PE manager does create one of these funds, how will they also find the time to keep managing existing, traditional PE funds? Very large firms might be able to pull this off by refocusing existing staff or hiring up, but the vast majority of PE firms just don't have the manpower. * Morning Call: U.S. futures point higher, London slides to 6-year low, other European shares hit the 12-year mark, the Nikkei closes down less than 1% and Hong Kong keeps diving. * The Age of Madoff: D.E. Shaw is hiring independent administrators to prove its investments exist. Not that its investments exist, mind you, but just that they're tangible.
1 min read · 03 March 2009
This was originally posted by Chris Douvos, who seems to be the only LP who blogs. If this place really existed, however, he would be far from its only LP customer...
1 min read · 02 March 2009
2 min read · 02 March 2009
Two months ago, we reported that Sun Capital Partners had laid off just over 10% of its 200-person staff. My gut take was one of confusion. Shouldn’t a distressed investor like Sun be preparing for its salad days? Doesn’t Sun need an outsized staff, to execute on its strategy of intense, hands-on interaction with portfolio companies (operating execs in-house instead of by the phone, weekly reporting by portfolio cos., etc.)? And shouldn’t Sun have plenty of management fee income rolling through the door, given that it’s investing out of a $6 billion fund that is just 26% called down? All of these questions came flooding back to me over the weekend, when I got word that Sun had laid off another 12 investment professionals. These new cuts follow Sun’s decision last month to close its Tokyo office (one deal in three years), and means that the firm has canned approximately one-third of its investment staff in 2009. Moreover, the firm has no plans to either reduce its fund size or reduce its fund management fees.
3 min read · 02 March 2009
* KKR is reevaluating the "advisability" of going public, via a takeover of its Amsterdam-listed vehicle. * Peter Thiel explains why Facebook's proposed takeover of Twitter failed. * Morning Call: U.S. futures down on heavy AIG losses, European shares extend losses, London tumbles early, the Nikkei slides 3.8% and Hong Kong drops 3.9 percent. * The power of ethnic networks in Silicon Valley. * Paul Kedrosky: Y2K, the Credit Crisis, and the Rosencrantz Fallacy. * Was Rick Santelli's rant a plant?
1 min read · 02 March 2009
I was on Reuters Insider earlier today (vid after the jump), to discuss the possibility of private equity firms buying ILFC, the aircraft leasing unit of AIG. Reports are that Carlyle is leading one possible consortium, while Greenbriar Equity and Onex Partners are teaming on another. KKR and TPG each had expressed early interest, but have since bailed. To me, there are two huge obstacles to PE firms buying IFLC: (1) Financing the transaction and (2) Owning and operating IFLC. The first obstacle is obviously first. IFLC reportedly is valued at $8 billion, which would require a minimum of $4 billion or $5 billion in leverage. That type of outlay is theoretically possible, but far from probable. Credit still hasn't loosened much when it comes to large leveraged loans, which means I only see this working if the government steps in as the lender of last resort.
2 min read · 27 February 2009
1 min read · 27 February 2009
Apparently you can now embed CNBC videos, which is a long overdue innovation. Here's my spot from this morning, alongside Robert Stewart of the Private Equity Council. It became almost exclusively about carried interest tax:
1 min read · 27 February 2009
1 min read · 27 February 2009
1 min read · 27 February 2009
