I keep hearing that these are the salad days for distressed investors, but such present thinking ignores major troubles in legacy distressed portfolios. For example, take a look at the latest quarterly marks from MatlinPatterson, a New York-based firm with more than $7 billion in assets under management. What follows are through Q4 2008, and were sent to peHUB by a MatlinPatterson LP:
1 min read · 02 April 2009
* Topps is offering a new set of trading cards featuring famous hoaxes and scams, including one for Bernie Madoff (the 1908 Honus Wagner of this set, I believe). This story sounds like an April 1 hoax of its own, but the AP pickup gives it additional credence. * The Tulane M&A Conference begins today, and the likely attendees are pessimistic. * What do nudists, Britney Spears and AIG executives all have in common? * Morning Call: U.S. futures point upward, London up 3% in early trading, European shares rise for third straight day, the Nikkei jumps on auto rally and Hong Kong surges 7.4% to close at a three-month high. * Jeff Nolan: Is Twitter killing RSS? * A live Twitterfeed from the G20, via CoverItLive, via Kedrosky. * By the power of Gray Skull... GTCR buys He-Man. And Casper. And Rudolph the Red-Nosed Reindeer, etc.
1 min read · 02 April 2009
The hits just keep coming for Apollo Management, which is now being sued for allegedly concealing problems at Linens 'n Things. The plaintiff is fellow private equity firm Levine Leichtman Capital Partners, which operates a leveraged loan fund that held around $43.5 million of senior secured notes in the now-bankrupt retailer. In the complaint filed March 20, LLCP accuses Apollo of making materially false statements about Linens 'n Things' fiscal health. For example, Apollo allegedly neglected to reveal that some of its credit agreements were in default:
2 min read · 01 April 2009
Buyout fund-raising fell off a cliff last quarter, according to preliminary data from Thomson Reuters (official numbers come later this month). Forty funds managed to secure just $17.24 billion in Q1, compared to 117 funds raising $99.71 billion during the same period in 2008. For the long division-challenged, that represents decreases of 65.81% and 82.71%, respectively. To find a similarly-slow quarter, you need to go all the way back to Q1 2004, when 54 funds raised $17.95 billion. The aforementioned data is global, and covers all buyout, recap, turnaround and mezzanine funds. Thomson Reuters also found similar declines for a broader data set, which included additional categories like distressed, energy, funds-of-funds, secondaries, real estate and timber. Both sets of figures are available on a spreadsheet that you can download after the jump.
1 min read · 01 April 2009
peHUB has learned that Capital Dynamics of Switzerland has signed an agreement to buy HRJ Capital, a Silicon Valley fund-of-funds manager that last year defaulted on a warehouse loan from Silicon Valley Bank. Financial terms are being held close to the vest, although sources say that the transaction will include a partial repayment of the $68.9 million debt. A final close is not expected to occur for at least a month, because HRJ needs to get limited partner approval for the change of management company. This deal would cap off a traumatic year for HRJ, a firm formed in 1999 by ex-NFL stars Harris Barton and Ronnie Lott.
3 min read · 31 March 2009
If you saw the Globe sports page today, you might have read a Bob Ryan column about how anti-poverty agency ABCD is struggling to find corporate partners for its annual Field of Dreams event. Tough economy, just at the time when a program like ABCD is needed most. The program is a fundraiser for ABCD, and allows participating corporations to field a softball team that gets to play at Fenway Park for an afternoon. The tax-deductible cost is $15k per team, which allows 22 players and up to four coaches. There is also a $7,500 half-team option for 11 players, two coaches. So I was thinking… How about a peHUB team? Each person chips in their share, and we all experience a once-in-a-lifetime afternoon. Send me an email if you might have interest.
1 min read · 31 March 2009
A bunch of hooting and hollering this week over The Blackstone Group’s refusal to comply with an SEC request that it publicly disclose the performance of its buyout and hedge funds (kudos to Bloomberg for the get). In a December 5 letter to the SEC, Blackstone said, in part: “The individual rates of return have no direct impact on our financials and therefore we question the relevance to our investors.” The SEC responded two months later, by saying that it had completed its review and did not have further comments “at this time.” Not quite sure I understand either Blackstone’s position (or the related outcry). After all, almost all of this information is publicly available elsewhere. Remember, Blackstone takes tons of money from public pension funds in disclosure-friendly states like California, Oregon and Washington.
1 min read · 31 March 2009
Several years ago, academics Josh Lerner (Harvard) and Antoinette Schoar (MIT) published a paper about how LP returns are affected by the location of their general partners. Specifically, they found a negative proximity effect – that the PE portfolio performance of state pensions and public universities improved the farther away they invested from their home states. For example, UMass would do better if 70% of its GP commitments were to out-of-state funds, as opposed to if only 40% were. Why bring this up today? Because Lerner and Schoar have just released a new working paper on the direct investment strategies of sovereign wealth funds, which features a strikingly similar conclusion. From an email Lerner sent over:
2 min read · 31 March 2009
* Cerberus would lose its equity stake in Chrysler, under terms of the Obama Administration's proposed restructuring. Maybe that's for the best, given that Cerberus has already pledged to decline any carried interest from the deal -- thus minimizing its alignment of interests (never understood why that was a good idea). The firm will, however, continue to be a bondholder in Chrysler, and majority stakeholder in Chrysler Financial. * Google formally announces its venture capital unit. * The Private Equity Council yesterday released a new white paper on PE's role in promoting economic recovery. Here's the download. * Morning Call: U.S. futures looking up, European shares rise on bank rally, the Nikkei falls 1.5% and Hong Kong closes higher. * A new "Nigerian" email scam is using private equity as its bait. * The government crackdown on P2P lending (most of which is VC-backed). * CEO is again the safest job in America (well, at least outside of Detroit)
1 min read · 31 March 2009
As we suspected, TheFunded was playing a prank when it intimated last Friday that it wasn't long for the Web. Basically a premature April Fool's Day joke/PR stunt, although a few too many bloggers were willing to believe that some sort of serious legal threat was at hand (if there were such a suit, wouldn't the site have shut down immediately, rather than giving five-day's notice?). Anyway, check out the site's new message after the jump:
1 min read · 30 March 2009
