Private Equity
Take Risks, Get Punished: Credit Suisse is handing out bonuses in the form of the very toxic mortgage assets the firm was selling. How's that for eating your own cooking? (Dealscape) She Knew It, Round Two: This time it's he knew it, and that he is Harry Markopolos, an investor who tried to take Madoff down numerous times. Infectious Greed calls the Wall Street Journal story on it a "must-read." Bad News: For GE just keeps pilin' up. S&P today said the firm's AAA credit rating may be lowered. Deal Journal: Heidi Moore on Why Cerberus Won't Put More Money Into Chrysler. PEC: Not Happy with Obama's Priorities. Dealbook reports.
1 min read · 18 December 2008
The Clinton Foundation Donor List is Up, and unsurprisingly, PE pros are among the contributors. We of course know Bill Clinton has connections to private equity through his friendship with Yucaipa founder Ron Burkle (see: Vanity Fair, "Bubba Trouble"). But it apparently goes deeper than that. This, despite Hillary Clinton's slamming PE carried interest during her presidential campaign. Glenn Hutchins, the co-CEO of buyout firm Silver Lake, is the top PE contributor on the list of 208,000 people, company and government donors. This position places him in the $250,001 to $500,000 group. Follow the jump to see which other PE pros have donated to the Clinton Foundation.
1 min read · 18 December 2008
Personal MBA: Following on last week's news that maybe you don't need an MBA, here is Personal MBA, a "program" that's "designed to help you educate yourself about advanced business concepts on your own time and without going into a classroom or into debt." Contrarily: BusinessWeek is documenting the five year path to business school in a five-part series. Here's part two. She Knew It: The Barron's reporter that called out Bernie Madoff explains the background of her 2001 story in Portfolio. More people should've listened... (Portfolio) Observations: Where are PE firms located, versus where they are investing? PE Blogger shows its New York, and California, and in second place, respectively, California, and Texas. Clusterstock Wonders: What is the actual purpose of a fund of funds?
1 min read · 17 December 2008
The Private Equity Council has a bone to pick with S&P's recent string of reports, which tracks the "Traces of Private Equity DNA" in defaulting companies. The problem, according to PEC, is that a list compiled by S&P looks at non-control stakes, which make up the majority of the PE-backed defaulters. Whether or not to blame a minority shareholder for a default is one thing, but S&P actually included at least one company that didn't even have PE investment at the time of default. PEC called the analysis "strained." S&P's latest report, which got media attention here and elsewhere, shows that 53 out of the 86 S&P rated defaulters are "related to private equity." According to PEC's investigation, only 22 companies had PE control stakes. I think this is a valid complaint, evidenced by an in-depth document (view it here) outlining S&P's "promiscuous" definition of the word private equity. The PEC list of 22 defaulters is available here.
3 min read · 17 December 2008
Dear Sirs: Maurice Greenberg is not happy about the price being paid for AIG's toxic assets. He wrote a letter to Edward Liddy to tell him so. You Knew It Was Coming: Madoff gear on eBay. And Even Better: Madoff speaking in 2007, where he outlines how fraud is nearly impossible. Best line at minute 5:30: "It's impossible for a violation to go undetected, especially for a long period of time... That doesn't mean there aren't abuses..." (Infectious Greed) So About That Argument: That a bankrupt automaker would discourage people from buying cars. Looks like that's out the window, according to a poll.
1 min read · 16 December 2008
Yesterday peHUB reported that GE Antares would delay its rumored layoffs until the New Year. Today, we found out why. Thanks to a tip from my Buyouts colleague Ari Nathanson, it appears the mid-market lender and its parent company, GE Capital, plans to lay off members of its staff in one fell swoop in early January (we hear Jan. 8, to be exact). The initial layoff plan for GE Antares was to occur in two waves, with one taking place last Tuesday and one in January, multiple sources said. However, parent company GE is in the midst of changing its corporate severance policy to provide smaller packages for 2009 layoffs. The conglomerate's legal team told GE Capital to make all the cuts at once, to avoid discrepancies between the severance packages in the two waves of layoffs. Because GE Antares hasn't finalized its layoff list, the firm will have to lay off both groups in January, likely with the new, lower severance package, one source said.
2 min read · 16 December 2008
Below, the latest round of S&P ratings headlines on a few private equity-backed portfolio companies. Listings with asterisks denote inclusion in S&P's Weakest Links list. December 16, 2008 Brookstone Inc. Outlook Changed To Negative; 'B' Corporate Credit Rating Affirmed. Brookstone is backed by J.W. Childs Associates and Temasek Holdings. Perkins & Marie Callender's Inc. Downgraded To 'CCC' On Note Payment Concerns. Perkins & Marie Callendar's Inc. is backed by Castle Harlan. *** Del Frisco's Restaurant Group Outlook Changed To Negative;'B' Corporate Credit Rating Affirmed. Del Frisco's is backed by
2 min read · 16 December 2008
This is the time of year when PR machines roll out their best pundits to pontificate on The Future. I'm not sure what qualifies one to predict the unknown, but 2008 was certainly more unpredictable than years past, reminding us of just how futile those prophecies are. In light of the Economists' recent apology for being way off on last year's economic predictions ("About 2008: sorry."), I've rounded up some other 2008 forecasts for private equity, lending, fundraising and even venture capital. I think they serve as a nice a measuring stick for how seriously to take the current predictions for 2009: With a giant grain of salt. "The Lending and M&A Markets Will Return In The Second Half of '08" This prediction wins the most erroneously off the mark award. I saw one report that even predicted $10 billion deals by the end of the year. To be fair, no one could have foreseen what happened in September (except, say, Peter Schiff). It could even be argued that things were starting to look positive, or at least flat, leading up to Lehman.
5 min read · 16 December 2008
Mark Cuban: Hates the FroHawk, for no specific reason. Sovereign Loss Funds: Council of Foreign Relations blog tries to model Abu Dhabi and other SWF losses. "So much for forecasts that sovereign funds would emerge as a huge forces in global markets..." Why We Should Save Predictions For The Psychics: The Economist apologizes for its wrong predictions for this year. Before going on to make another round of bold calls for next year. (Dealbook) Something Fishy: Big Picture is very skeptical the Madoff family had nothing to do with the Ponzi scheme. Speaking of Madoff, here is the longest victim list I've seen. Nevermind, here's another one. Charles Ponzi: Dealbook outlines a century of Ponzi Schemes, including Mr. Ponzi, the OWCG (Original White Collar Gangsta).
1 min read · 15 December 2008
Time magazine has launched 100 “Top Ten” lists of 2008. The magazine is courting page views with its slideshow format (garnering 10 page views for each list instead of one), so to save you time, dear readers, I’ve pulled out all the private equity mentions. Sadly, private equity did not make the Best Deals list, but it did score three “Worsties.” The winners (er, losers) come as no surprise, although I could think of a few more deals to throw in the mix. I was surprised, however, that TPG and Apollo’s investment in Harrah’s made number three while TPG’s stinger on WaMu clocked in all the way at number nine.
2 min read · 15 December 2008
