Private Equity
Following Dan’s liveblog of this morning’s Blackstone Q2 earnings call for media, I sat in on the much longer analyst call. Even though Blackstone’s improved performance last quarter blew analyst’s expectations out of the water (despite reporting a loss), I hung up scratching my head at a few of the statements from CEO Steve Schwarzman and COO Tony James. For example—did you know Blackstone was a middle market firm? They’ve been saying this for a while now (at least, since the mega-market died), and today Schwarzman emphasized it again in his opening remarks: Debt financing remains scarce but we can still get funding for good companies and middle market companies generally, which is our sweet spot. Later, James echoed that sentiment while he distinguished Blackstone from other mega-firms.
3 min read · 06 August 2009
Now that the weather has finally warmed up, plenty of M&A bankers are hoping the market for deals will as well. We’ve noticed a few more targets coming to market in recent weeks and have compiled a list of some of those we’ve come across. Our sources are various news reports and the Buyouts “Seeking Buyers” list. The following companies (among many others) are either formally considering “strategic alternatives,” reported to be on the block or are rumored to be in sales talks. For prior lists, see below, and send any additions my way. Coinstar Inc., based in Bellevue, Wash., plans to evaluate strategic alternatives for noncore businesses that include its money-transfer and e-payment units. WPT Enterprises is rumored to be seeking a buyer for subsidiary World Poker Tour, based in Los Angeles. Publicly traded 4Kids Entertainment retained Montgomery & Co. to assist it in exploring strategic alternatives.
3 min read · 06 August 2009
A Little Reassurance: Limited partners need more certainty - and want some cash back, too. (Breakingviews) On The Goldman Sachs Front: Lloyd Blankfein's wife apparently missed yesterday's memo about high-profile spending. (Page 6) Cool Infographs: How Americans spend their days. (NY Times) Column One: Columnist Rolfe Winkler feels betrayed by Warren Buffett, the hypocrite. (Reuters Blogs) Column Two: Columnist Neil Unmack says that private equity deals won't be bailed out by the reviving high-yield bond world. (Reuters)
1 min read · 05 August 2009
2 min read · 05 August 2009
American Capital reported its second quarter earnings today and they weren’t pretty. The business development corp. (BDC) lost $547 million in the quarter and provided no update on its default on $2.3 billion in credit. It has been in default for around five months, and continues negotiations with lenders over resolving the default. I listened to its 90 minute earnings call with CEO Malon Wilkus—highlights after the jump...
3 min read · 05 August 2009
This year the bonuses will be distributed in blood diamonds: I love it when satire becomes reality. Weeks ago the New Yorker published a mock internal letter from Lloyd Blankfein to Goldman Sachs employees, asking them to cut down on conspicuous consumption in light of the firms egregious bonuses. This week Blankfein does just that, according to the New York Post. At It Again: That eternal thorn in private equity's side, Andy Stern, has filed a big private equity diss in the Wall Street Journal's op-ed pages, focusing on bank investments.(WSJ) They're Already Longer Than Most: "Fundraising cycles for large private equity houses are likely to lengthen as the slow pace of investment leaves many with unspent capital from previous funds, said the head of HarbourVest's fund of funds business in Europe." (Reuters) Pundit War: Its blogger versus talking head. Charlie Gasparino of CNBC says Felix Salmon (of Reuters) has a "bizarre, on-again, off-again obsession" with him. Appalling that Salmon can't even be consistently obsessed with a CNBC anchor. (Business Insider)
2 min read · 04 August 2009
Dallas-based turnaround firm Insight Equity has closed on $361 million for its second fund, a $500 million effort it entered the market with almost a year ago, according to a regulatory filing. If that sounds like a teeny tiny improvement over the firm’s last close, that’s because it is. Just a month ago, Insight Equity closed on $312.5 million. If this seems like an insignificant development to report, that’s because it is.
2 min read · 04 August 2009
Private equity has been dead, dead, dead in 2009, and the industry can thank the lack of available debt financing (among other things). However, some middle market firms have found regional banks willing to fill the void left by wounded senior debt providers. In recent months, debt providers like Keybanc Capital Markets, SunTrust, Fifth Third Bank, Union Bank and Tri-State Capital Bank have stepped up their efforts in providing senior loans for sponsor-backed transactions. With the traditional providers of capital, like CIT, GE Capital, and the bulge bracket banks on the sidelines. The regional lenders weren't as active in the LBO business over the past three to four years and haven't been hurt by "market excesses," so now is their time, according to lenders I spoke with. For example, Keybanc Capital Markets has launched efforts to expand its financial sponsor coverage, hiring former CIT Managing Director Thomas N. King as a managing director within its financial sponsors group
3 min read · 04 August 2009
The Fee War: "Unlike many private-equity firms which have reduced fees, hedge funds aren't budging without concessions such as longer lock-up periods and commitments of at least $100 million, according to money managers and consultants." (Bloomberg) Rewarding Bad Actors: "If you aren't outraged, you haven't been paying attention." (Paul Krugman) The truth about grit: "Modern science builds the case for an old-fashioned virtue - and uncovers new secrets to success." ( Boston.com) Tarnished Brand: Well Matt Tiabbi and others seemed to have succeeded. According to a study conducted by the Financial Times, Goldman Sachs' brand and reputation have been "tarnished." (FT) That group of "others" includes Zero Hedge according to Wall Street Cheat Sheet. Back and Forth: Seeking Alpha's Robert Solomon is bearish on private equity, so he naturally disagrees with Economist's hopeful article from last week. (Seeking Alpha)
1 min read · 03 August 2009
Here's your daily gossip fix: Page Six spotted Steve Schwarzman over the weekend partying with his wife and two friends in the style of a certain racy teen pop group. The gossip column reports (via Daily Intel): "BLACKSTONE billionaire Stephen Schwarzman staying cool at VIP Room in St. Tropez while his wife, Christine, and two blond friends, Michelle Herbert and Gina de Franco, danced together like the Pussycat Dolls." Maybe Steve is thinking of one-upping Henry Kravis, whose firm now owns the rights to such pop hits as "Who Let the Dogs Out" and "Livin' La Vida Loca." We now return to your regular private equity programming.
1 min read · 03 August 2009
