With just three games left to go, we have a new leader in our March Madness Extravaganza: Dan Doman, an associate with G-51 Capital Management, a seed-stage firm based in Austin, Texas. He's got 111 points so far, with UNC topping Michigan State in the final game. Close on his heels with 104 points a piece are Mike Gaiss of Highland Capital Partners (UNC beating UConn) and Cris Allen of Windjammer Capital Investors (who has no real shot, since he picked Louisville to win). Continued good luck to all...
1 min read · 30 March 2009
* So much for more auto bailouts. Steve Rattner has brought some spine to Washington, and the result is 60 days in operational funding for GM (rather than the requested $16b in loans), the ouster of GM CEO Rick Wagoner and just 30 days for Chrysler to complete its alliance with Fiat (or else face liquidation): "The autos panel rejected a claim by Cerberus that Chrysler could be viable on its own, citing its relatively small size, weak product line-up and declining U.S. market share." * Michael Osinski: How I helped build Wall Street's bomb. * Morning Call: U.S. futures down on automaker woes, European shares pulled lower, London off 2.6% in early trading, Nikkei slides 4.5% and Hong Kong falls 4.7%. * When a small town loses its only bank. * Are the lab rat's days numbered? * Tim Geithner on This Week: "We have roughly $135 billion left" in uncommitted TARP funds.
2 min read · 30 March 2009
Early Saturday morning, Ross Levinsohn confirmed reports that Jon Miller -- his investment partner for the past several years and former CEO of America Online -- is heading back to the operating world, as News Corp.'s new head of digital media. The deal isn't official yet, but is expected to close once Miller's non-compete with Time Warner expires this Tuesday at midnight. Most of the related coverage has focused on what Miller's move could mean for News Corp., but I'm more interested in the ramifications for Velocity Interactive Group -- a VC firm that Miller and Levinsohn helped form in late 2007, alongside the dysfunctional remains of ComVentures. My gut reaction is that it may prove fatal, particularly given Velocity's difficulty raising new money even with Miller. On the other hand, it's also possible that Miller's presence was a double-edged sword for certain LPs, given his well-known (and now indisputable) wanderlust. Not that his departure is a net positive, but perhaps it's more a flesh wound than a death blow.
3 min read · 30 March 2009
Just got back from New York, to find nearly a dozen emails asking if I'd heard about TheFunded shutting down. The hubub is related to the following message that appears as a splash screen on the site's homepage:
2 min read · 27 March 2009
I wrote last week that NY Common was particularly ripe for corruption, because its system is designed as a single fiduciary. One bad apple, therefore, is the only apple. The only other state with a similar system was Connecticut, and that ended up with both an elected treasurer and private equity manager in prison. But maybe I transposed the cause and effect. As someone suggested to me yesterday: “The corruption didn’t happen because it was a single fiduciary. It got exposed because it was a single fiduciary.” In a related line of thinking, perhaps Loglisici’s strategic mistake was using one corrupt “placement agent,” instead of using three or four. *** I’ve had multiple public pension managers (past and present) tell me some version of the following: “I am/was responsible for X% of the private equity portfolio. It was made clear to me that I shouldn’t concern myself with the rest.”
2 min read · 27 March 2009
Yesterday I interviewed Peter Nolan, managing partner of Los Angeles-based PE firm Leonard Green & Partners, as part of Buyouts East in New York City. He was pretty candid -- perhaps emboldened by his firm’s seeming lack of recent scandal or massive portfolio company collapses (amazing, really, given its heavy emphasis on retail). Some takeaways: • There had been some trade reports that the firm was raising an annex its fourth fund ($1.85b, 2004), but what it’s technically done is to get a recycling provision. This still could present similar legal conflicts inherent in an annex or cross-fund investing – LPs who don’t participate could have their initial investments diluted – but it’s a bit easier for LPs to sign off on because it doesn’t require new capital commitments. • Leonard Green is concentrating on PIPE deals (i.e., Whole Foods) and bank debt purchases right now. It just doesn’t believe that leveraged buyouts can work in this market, in large part because of seller expectations. • Nolan doesn’t shy away from the “financial engineer” label. Remember, this is a firm without “operating partners.”
2 min read · 27 March 2009
* Credit Suisse says an investor stole hundreds of millions of dollars from its PE funds unit: "A brazen conspiracy... to cheat and deceive on an unmatched scale." * Henry Blodget: Alan Greenspan's fatal flaw was a need to be liked. * Spencer Ante: Facebook is trying to secure $100 million, via a handful of credit lines that would help it finance leases for new hardware. * Dan Gross: Let individual investors in on the toxic asset plan. * Morning Call: U.S. futures point lower, London rises early, European shares dropped by oil, Tokyo's Topix posts largest weekly gain in 12 years and Hong Kong edges up. * What if Geithner throws a PPIP party, but no one comes? * Justin Fox vs. carried interest as capital gains.
1 min read · 27 March 2009
Just for back from our 3rd Annual Buyouts Awards Dinner, as part of Buyouts East. I know such a spectacle sounds a bit perverse on first blush (given the times and all), but most of these awards were for exits (i.e., verifiable successes). Plus, there was a charity involved (St. Jude's). Anyway, here are the winners: Buyout Firm Of The Year Advent International Deal of the Year ABS Capital Partners for American Public Education (17.1x return multiple) Large Market Deal Of The Year: Hellman & Friedman for DoubleClick (8x return multiple)
1 min read · 27 March 2009
It seems we finally have a lawsuit related to LP defaults on private equity fund commitments: CapGen Capital Advisors, a New York-based PE firm focused on the financial services sector, is alleging that both Chalice Fund LP and WK CG Investment did the illiquid deed, according to a complaint filed on March 4 in Delawar. These are very small commitments -- just $4.5 million in total -- but CapGen wants the remainder paid with interest. Read more in this client alert sent over by law firm Kirkland & Ellis (begins on page 3).
1 min read · 26 March 2009
I spent some time yesterday firing questions at Scott Sperling of THL Partners, as part of the Reuters Private Equity Summit. He kept most specifics close to his vest (IFLC auction, Q4 markdowns, etc.), but did offer a few tidbits *** He didn’t completely rule out participating in the toxic asset program, but he said it was highly unlikely. Not because the guarantees aren’t good enough, but because THL simply doesn’t like investing in assets without control. For example, it won’t do minority PIPE deals or minority debt purchases. *** Sperling still believes in the Clear Channel investment, even though the advertising downturn has been longer and deeper than THL had expected. He wouldn’t comment on valuation, but also didn’t flinch when I threw out a markdown of approximately 50% (ballpark figure that I’ve heard from multiple sources, related to both THL and Bain).
2 min read · 26 March 2009
