Private Equity
As usual, we have a weeks worth of ratings actions on the debt of buyout-backed companies from ratings agencies Moody’s and Standard & Poor’s. Both agencies appear to be on vacation, since the list is light for the fourth week in a row. Either that, or all the low-rated debt is undergoing distressed exchanges or getting terms amended. Once again, all of the ratings actions are related to exchanges or repurchases. Company: Dana Holding Corporation Sponsor: Centerbridge Capital Partners LP Revision: Moody’s revised the company’s probability of default rating to Caa1\LD from Caa1. Highlights: “The positioning of Dana's PDR at Caa1\LD reflects the company's second quarter earnings call announcement of completing additional open market purchases of its senior secured term loan at distressed prices beyond levels previously achieved through the Dutch auction concluded in May 2009.
2 min read · 14 August 2009
Finance DOES Pay: Steve Schwarzman is the highest paid CEO in the US. (peHUB) Blackstone Issues Its First Ever Bond Offering: And its for "general corporate purposes." Is the firm on the prowl for strategic acquisitions? There are plenty of targets out there and Steve and Tony have always hinted at expanding via asset management plays. (Reuters) Is Private Equity Creating a Microlending Bubble? Private equity funds have "poured billions of dollars over the past few years into microfinance world-wide," leading to poor neighborhoods in India being "carpet-bombed" with loans. (WSJ) The Real Housewives of Goldman Sachs: Part two. Now a Goldman wife has been arrested for a DWI. Oy. (Dealscape)
1 min read · 13 August 2009
Here's more proof of how tough fundraising is (after yesterday's proof that it's not tough for everyone). Two funds which appear to be safe bets are struggling. One has at a couple of successful exit under its belt, the other focuses on banks, a timely strategy. Blue Wolf Capital, a New York-based private equity firm, has raised $112.1 million from nine investors toward Blue Wolf Capital Fund II LP. The firm raised an additional $4.1 million from nine investors in a separate feeder fund. That fundraise seems to be a problem because the firm held a close on $100 million all the way back in September 2008. Only raising $12 million more in a year suggests to me that the firm will likely lower its fundraising goal from $250 million.
2 min read · 13 August 2009
As we reported yesterday, Sun Capital's investor advisory board approached the firm about reducing the size of its fifth fund. Those talks are in very early stages with nothing agreed-upon yet, but today a source revealed a few more details. Investors are seeking a fund cut of approximately 25% of remaining capital, peHUB has learned. As reported, the $6 billion fund has $4.44 billion remaining, so, the size cut would be approximately $1.11 billion. The source said Sun Capital's founders, Rodger Krouse and and Marc Leder, have been receptive to the idea of a reduction and are working on a solution with the investors. However, Sun Capital's fee structure may complicate things.
2 min read · 13 August 2009
It's summer slowdown season, and M&A bankers are feeling the fizzle. Here are some potential target 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, and send any additions my way. Jones Soda, a publicly traded soft drink business, said there is "substantial doubt" that the company can continue as a going concern. The company is looking into possibility of public or private offerings of debt or equity securities, joint ventures with one or more strategic partners and other strategic alternatives. ING Groep NV is looking to sell assets to raise money to pay back its emergency government aid but has not received offers that suit its desired price. Coalcorp Mining Inc has resumed operations at its La Fancia mine, which it announced was a candidate for divestiture last week.
3 min read · 13 August 2009
Well if George Says So: The U.S. economy has hit bottom and the current quarter will see positive growth due to the government's stimulus spending, billionaire financier George Soros said. (Reuters) I Swear, He's Cool: "JPMorgan Chase CEO Jamie Dimon is taking the rare step of meeting with the heads of the biggest buyout shops to assure them that he's behind his new -- but relatively unknown -- head of the team that serves private-equity firms." (NY Post) In the Atticus Aftermath: The Five Greatest Hedge Fund Farewells. (Deal Journal) There's Something About Mary: Felix Salmon noticed a change in the WSJ Stipple drawing of SEC Chairwoman Mary Shapiro. (Reuters)
1 min read · 12 August 2009
Today TA Associates closed one of the first “LP-friendly” buyout funds to emerge from the credit crunch. The firm raised $4 billion for TA XI, its fund for U.S.-based investors. (The firm has a separate fund for foreign investors.) The fact that it was oversubscribed by $500 million only proves that one nice gesture goes a long way. To refresh your memory, the Boston-based growth investment firm lowered the carried interest on the fund from 25% to 20%, lowered its management fee to an average of 1.74 percent of commitments, agreed to offset management fees with transaction and director fees, and added a no-fault divorce clause. I spoke with Managing Director Brian Conway about the motivation behind the change in terms, the negative IRR of TA’s tenth fund, and the firm’s strategy as a growth investor deploying cash in a not-growing economy.
4 min read · 12 August 2009
Monday was the last day for comments on the FDIC's proposed rules for private equity investments in failed banks. A group of large private equity firms calling themselves the "Private Equity Commenters" submitted a letter, which we've posted below. The letter, submitted by law firm Simpson Thacher, speaks for Blackstone Group, Centerbridge Partners, Corsair Capital, Irving Place Capital, Lightyear Capital, Oak Hill Capital Partners and TPG Capital. A few of the firms have already been involved in banking transactions--Blackstone and Centerbridge were part of the group that took over BankUnited. The letter addresses the same concerns many others have expressed regarding required capital levels, cross-guarantee liabilities, and the definition of "source of strength," among others, while highlighting the benefits of private investments in banks. Those include job preservation, community support and increased competition which benefits customers, the letter states. At around 11 pages, it's probably the most in-depth response the FDIC has recieved to date. Read it in full below.
10 min read · 12 August 2009
At least that’s what a new mid-year report from Cogent Partners observes. The secondary intermediary firm closed more than $2.5 billion worth of transactions in the first half of 2009, and less than 20% of those deals had a traditional secondary fund on the buyside. (See first chart below) That’s troubling news considering the sheer amount of money secondary funds raised last year. Thomson Reuters doesn’t track secondary fundraising but an unscientific survey revealed that just nine placement agencies raised a collective $24.1 billion in secondary funds in 2008, to give you a sense of the market. Meanwhile a chart peHUB published in April estimates that secondary firms raising new funds are targeting an additional $33 billion in commitments. Yet despite rampant enthusiasm for the deeply discounted secondary market earlier this year, the wave of activity has yet to take place. Traditional buyers have largely remained on the sidelines, thanks to sellers’ unwillingness to sell at such steep discounts.
3 min read · 12 August 2009
New Firm Alert: Mahindra Partners, the in-house private equity group of Mahindra & Mahindra. (Reuters) What Are PE Pros Reading This Summer? Contributions from professionals at CalPERS, Carlyle, THL, Bain Capital, Providence Equity, New Mountain Capital and more...(Private Equity Beat) Need a Job? Go to China. (New York Times) Need a Job In Private Equity? Here's some advice from Abby Adlerman, who leads the PE practice at executive recruiter Russell Reynolds. (The Deal)
1 min read · 11 August 2009
