Private Equity
As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies by Moody's Investors Service Standard & Poor's Ratings Services. This week Moody’s rated an “aggressive” dividend recap, a move that seems to be back in vogue and totally uncontroversial again, with as often as we’re seeing them in recent weeks. In other bizarro news, an auto parts company was upgraded. What is this, 2006? Company: American Axle Sponsor: Blackstone Group Action: S&P raised its corporate credit rating on American Axle to 'B-' from 'CCC+'. Highlight: "The upgrade reflects our opinion that American Axle's liquidity has improved and that the company is now less likely to need to financially restructure," said Standard & Poor's credit analyst Lawrence Orlowski. Supporting this view is our assumption that light-vehicle production in North America is starting to recover.
2 min read · 19 February 2010
Don't Be a Sucky Presenter: Some tips from Jason Moriber (New Comm Biz) Link for Links: Reuters rounds up the recent influx of bankruptcy M&A news this week. (Reuters) Hahahha: It's no big deal that PE-backed IPOs aren't coming into fruition! Not at all! Even for a mega-funds! Like Carlyle! Just ask David Rubenstein! (BusinessWeek) From Finance to Film: After 10 years at Citadel and six more in the movie business, Julio DePietro, 38, is debuting his first film, "The Good Guy," a dramatic comedy whose main characters work at a financial institution called "Morgan Brothers."(Deal Journal) PE Arrogance: The private equity industry got a dressing-down from one of its chief defenders against potentially draconian regulation being discussed by the European Union. (Finalternatives)
2 min read · 18 February 2010
Walgreen Co's respectable ‘A+’ corporate credit rating may be in danger thanks to private equity. Yesterday the drugstore chain agreed to buy Duane Reade from buyout firm Oak Hill Partners, earning the buyout firm a 1.5x return. As a result of the deal, Walgreen will take on $457 million of Duane Reade’s debt and operating leases. That caused Standard & Poor’s to place the Walgreens' corporate credit rating on CreditWatch with negative implications. The change reflects S&P’s belief that the deal will bring weaker-than-expected earnings and no improvement in the company’s credit metrics. S&P is also concerned with Walgreens' limited track record in integrated large acquisitions and aggressive financial policy. S&P said any ratings downgrade as a result of the deal won’t exceed one notch, meaning the worst rating Walgreens can really get as a result of Duane Reade is a medium-grade ‘A’ rating. That caused Standard & Poor’s to place the Walgreen's corporate credit rating on CreditWatch with negative implications. The change reflects S&P’s belief that the deal will bring weaker-than-expected earnings and no improvement in the company’s credit metrics. S&P is also concerned with Walgreen’s limited track record in integrated large acquisitions and aggressive financial policy. S&P said any ratings downgrade as a result of the deal won’t exceed one notch, meaning the worst rating Walgreen can really get as a result of Duane Reade is a medium-grade ‘A’ rating.
2 min read · 18 February 2010
CalPERS may have messed up. The pension giant last night released a list of eight private equity and venture capital firms that did not reply to a voluntary request for historical placement agent information, but at least four of the firms claim that they did indeed comply. Ripplewood Holdings, EnerTech Capital, Fenway Partners and Pinnacle Ventures tell peHUB that they are working with CalPERS to correct the error. The mix-up may be related to the fact that CalPERS requested information in two waves; one of which used outside firm Steptoe & Johnson. A CalPERS spokesman said that, in one instance, the PE firm submitted its form to Steptoe & Johnson but not to CalPERS. The pension fund is looking into the other cases, he said.
3 min read · 18 February 2010
Playing it safe: Johannes Huth, KKR's head of Europe, is "cautiously optimistic" about 2010. (Financial News) For Sale Already? Retweet.com, a competitor to the much more popular Tweetmeme service, has put itself on the auction block. (Mashable) Anyone Want to Make a Vanity Investment? Terra Firma may sell Abbey Road to raise money for EMI. Paul McCartney hopes someone will rescue it. (Sidney Morning Herald) Private equity needs to improve its courtship: Investors neither wanted nor were ready for the wave of private equity IPOs being pushed through. (Telegraph) Sharia PE: Reuters is holding its Islamic Summit, and speakers predicted a PE boom for Islamic finance. (Reuters) Women in PE: In terms of geography, North America-based private equity firms have the highest percentage, 8.5%, of female employees in senior management roles in the industry. Not surprising, but disappointing. (Preqin)
1 min read · 17 February 2010
Oak Hill Capital Partners today agreed to sell New York-based drug store chain Duane Reade to Walgreen Co. for nearly $1.1 billion. Oak Hill earned just over 1.5x its money on the deal, according to a source familiar with the situation. Return-wise, it’s not a home run. But considering the company's struggle with debt and drug store industry consolidation (e.g., Rite Aid/Eckerd, CVS/Long's), it can be viewed as a solid double. Analysts called the price fair—it represents an 11.4x adjusted EBITDA multiple, which is only slightly higher than the 10.3x trailing EBITDA that CVS paid for Longs in 2008.
2 min read · 17 February 2010
Last Year's PE Doldrums: They're fading fast, according to a study from Pitchbook via DealFlow media. Leaving the Baby in the Arms of Private Equity: In response to my article last week on Succession Capital partners, Nick Leopard at Accordion Partners had some thoughts. (Changing the Game) Fund Managers Do Not Trust Private Equity: Bold Headline. Sub only. (Financial news) Hong Kong Singapore Shanghai and Shenzen: Those are four finance hiring hotspots in Asia, according to this detailed article. (FINS) PE Roll-Ups: PE firms are shopping for bite-sized acquisitions in the new post-LBO world, but will today's roll-up pan out? (IDD) Monomoy Capital Partners seems to think so. (peHUB) Scorn: There's at least one person who isn't a fan of Obama's financial reforms and that's Hank Paulson. (Times Online)
1 min read · 16 February 2010
Update: This story has been updated to correct the size of Monomoy's latest fund. Today Monomoy Capital Partners announced it acquired Casual Living USA, a Tampa, Fla.-based women's apparel retailer, from its family owners. I spoke with Daniel Collin, Partner with Monomoy, about the deal, which is the first add-on to the firm's catalog apparel platform, Boston Apparel Group. peHUB: You started the platform in July 2008, when you acquired Chadwicks and metrostyle from Redcats Group to form Boston Apparel Group for $25 million. Is this your first add-on to the platform? Daniel Collin: Yes. How many more acquisitions would you like to do on the platform? We're opportunistic. The initial investment has been very successful for us. We took it from a money-losing company to being profitable in 2009. We have capacity to be three times the size of our current business with our distribution, so we're actively looking for add-on acquisitions of direct retailers to plug into our cost structure.
3 min read · 16 February 2010
Here are some potential M&A ideas, rumored or official, to jumpstart your deal pipeline. Our sources are various news reports and the Buyouts “Seeking Buyers” list. For prior lists, see below. First Uranium, a publicly listed South African mining company, has formed a special committee to review strategic alternatives. L-1 Identity Solutions, Inc., a supplier of identity solutions and services, continues to explore strategic alternatives. MGM Mirage Inc. was rumored to be seeking a buyer for its 50 percent interest in Borgata Hotel Casino & Spa, which is a venture with Boyd Gaming Corp. Citi Property Investors is seeking a buyer.
2 min read · 16 February 2010
Here's a look at the last week's worth of scoops, data, and analysis from the peHUB team. Catch up on what you missed before it goes behind our paywall... All First Reads | All Second Opinions Make Your Meetings Suck Less: Here's How 10 Reasons Sherlock Holmes Is The Ideal VC Wharton PE Conference Notebook: VC Panels Bain Capital Ventures Raises Fund, Hires Operating Partner LPs' $400 Million Vote of Confidence: Redpoint Ventures Raises Fund IV New Fund Performance Data from UTIMCO "The Bachelor" Dumped by Facebook Employee Notes on the Pantheon Ventures Acquisition Dear FDIC, It's Been Six Months... How About Those Bank Deals? Is Sequoia Interfering with Portfolio Company Firesale? Tesla CEO Took Private Jet to Washington D.C. Freeman Spogli & Co. Chipping Away at Fund Six Teens in Tech: They're Here, They're Young, Get Used To It Did Owen Van Natta's Social Skills Fail Him? A Few Surprises About the Year's Biggest Take-Private
2 min read · 13 February 2010
