Private Equity
David the Raging Bull: More on David Rubenstein's speech at yesterday's PEA conference. "Private equity is back," said Rubenstein. (WaPo) Wall Street is Back, but Main Street isn't. A Little Advice: Investing is as much an exercise in controlling emotions as harnessing the intellect. (Morningstar) Videos: Warren Buffet's take on the recession. No bounce, but no deterioration either. (Paul Kedrosky) Buyers Beware: Buyers of the TPG-backed IPO of Myers Group in Australia "should be extremely wary", said Stuart Wilson, chief executive officer of the Australian Shareholders' Association, which has 8,000 members. (Bloomberg) Toning it Down for the Team: The Private Equiteer comments on the importance of internal negotiations, saying, "In deals and in life, you often benefit much more from not getting your way." (PE)
1 min read · 18 September 2009
And Amalgamated Capital makes seven. I've written so many stories about new lending groups formed to serve the "void" of financing in the middle market, that it's time to make a list. So I give you, the recent crop of new middle market lenders (please email with any I may have overlooked). The groups are in various stages of development-some have raised funds, others are seeking to secure credit, and even one is in registration to go public. While they're getting their ducks in a row, someone (anyone) find them some deals to finance! 1. Sankaty Middle Market Opportunities Fund will invest in middle-market mezzanine loans with some senior debt and equity. More specifically, it would target credit for new buyouts, rescue financings and secondary purchases of mezzanine debt. See related story.
3 min read · 18 September 2009
1 min read · 18 September 2009
Sankaty Advisors, the credit affiliate of Bain Capital, has held a first close on a new fund called Sankaty DIP Opportunities Fund. The vehicle has raised $160.8 million from 151 investors, according to a regulatory filing. A parallel offshore fund raised $21.5 million in commitments from 34 investors. The ratio of investors to dollars doesn't add up to a very sizable commitment per investor, which means their placement agent, J.P. Morgan Securities, is certainly earning its commission on this one. Then again, that could simply be a result of numerous employee contributions. In August peHUB reported that Sankaty was seeking $400 million for the fund, which will make debtor-in-possession loans to bankrupt entities. The $400 million fund has a two-year investment period with fees of 1.75% on commitments. The firm anticipates returns of between 12% and 15% for the entity.
1 min read · 18 September 2009
As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies from ratings agencies Standard & Poor’s Ratings Services and Moody’s Investors Service. It's Carlyle Week, as the mega-firm is the sponsor of three out of the five ratings actions we found. The firm’s energy services company, Stallion Oilfield, defaulted on a tiny $12.9 million interest payment. Another Carlyle energy services company, Titan Specialties, was downgraded because of its “vulnerable” business model and substantial leverage. Meanwhile, the firm’s waste management company, Wastequip, was downgraded for “PIK-ing its toggle” (why does that phrase sound so dirty?).
3 min read · 18 September 2009
Deal Professor: Dealbook's excellent deals analyst, Steven Davidoff, has published an excerpt from this book: "Gods at War: Shotgun Takeovers, Government by Deal and the Private Equity Implosion." (Dealbook) PE turns Gunslingers: Private-equity firms probably would like to forget the biggest leveraged buyouts from the boom. But buying the debt behind those deals has worked out a little better. (Heard on the Street) The Future of Ratings Agencies: Activist hedge fund investor William Ackman said on Monday that credit rating agencies should face more liability for their actions. "They won't be as profitable, but they'll be a lot more careful," Ackman. (Reuters) Better Burgers: Recent dealmaking indicates middle-market private equity firms are hungry for burger chains. (Dealscape) The Lehman Diaspora: Where Some of Lehman's Top Deal Makers Went (Deal Journal)
1 min read · 17 September 2009
The final keynote of this year's Private Equity Analyst conference is an interview with Carlyle Group co-founder David Rubenstein. This comes just after the FT reported that Carlyle is back on the IPO horse (even though Carlyle denies it). Hopefully he'll discuss that, plus such topics as Washington regulations, the credit environment and exit prospects. I'll be liveblogging the Q&A, which starts at 1:30. Get it below: Q&A With David Rubenstein - Where Does PE Go From Here?
1 min read · 17 September 2009
2 min read · 17 September 2009
Despite recent reports that deals like Skype and Warner Chilcott have signaled the return of lenders willing to finance large buyouts, guys in the trenches are saying "not to fast." In a panel titled, "The Changed Look of Wall Street" at the second day of the Private Equity Analyst conference, panelists painted a tough reality: leverage is not comin' back anytime soon. Said John Coyle, head of Permira's New York office: "Until the banks feel comfortable that they have enough capital and until the well runs dry on non capital businesses, they aren't even thinking about LBOs." In 2010, he said, the banks will eventually begin to look to take on more risk once they accumulate enough capital. That's not the reality today. He added that people may be excited about Skype but, it's still relatively small, with around 50% equity. And Warner Chilcott, the largest credit facility for an LBO this year, was actually a delevering transaction. The company, backed by Bain Capital LLC, Thomas H. Lee Partners LP, and the buyout units of JPMorgan Chase & Co. and Credit Suisse Group, actually went from 4x leverage to 3x in its acquisition of Procter & Gamble's prescription drugs business, Coyle said.
2 min read · 17 September 2009
I tell young professionals, "Don't go into private equity. You've got to be mad to go into private equity. -Guy Hands, Chairman and CIO of Terra Firma
1 min read · 17 September 2009
