Private Equity
It seems private equity investors have finally listened to our endless harping--they're taking a stand against general partner impropriety. Today, two separate sets of limited partners (LPs) took action against their GPs: In Munich, buyout fund Nordwind Capital's investors blocked its deal for a fertility clinic roll-up play, claiming the deal is off-strategy. The firm decided to cancel the deal rather than force the resistant LPs into default (note: all of this happens back in February, but it only came out today). And, in the U.S., investors in two Citigroup infrastructure funds have voted to ban them from making future investments, citing a key man provision and several failed deals. These actions, while headline-grabbing, are just a piece of some of the behind-the-scenes LP uprisings. Cash-strapped or not, private equity investors are actually using this tough fundraising time to negotiate for better terms in their fund documents (LPAs).
2 min read · 20 July 2009
Here's a look at the past two weeks of scoops, opinions and analysis from the peHUB blogging team. Facebook's London Sprawl Beginning to P.O. Neighbors Silicon Valley Smackdown Over Twitter Leak and Its Handling Amazing: Comic Dave Chappelle Tries Last-Minute Show in Portland; 4,000 Twitterers Crash Scene The Curiously Unsociable CEO of Social Networking Giant LinkedIn Google's Eric Schmidt: I Might Step Off Apple's Board. Eh, or Not. Oops! No website for Andreessen Horowitz Do "Operators" Make The Best VCs? Mark Cuban to peHUB: You're Wrong on This One Mark Cuban Cleared of Insider Trading Charges Steven Brill Tries Clearing the Air - and His Reputation - Around Clear Pass Debacle More Clarity on the Verified Identity Shutdown
2 min read · 17 July 2009
Goldman Sachs Internal Memo: Please limit high-fives and chest bumps to a dozen a day. Don't wear your crowns, except around the office. (New Yorker) Strip and Flip Crowd? Am I totally out of touch in my private-equity-covering bubble to think that we moved past calling buyout firms "strip-and-flippers" awhile ago? Particularly in the middle market, which is what this article refers to, the instances that can truly be considered "strip-and-flip" are rare enough that it seems inflammatory and sloppy to call it that. (Reuters) Distressed UK Speculation: Why is the Gates Foundation taking reckless risks? (Reuters) Great Headlines: CNBC Scores Big With Porn And Pot (Clusterstock) PEC Testimony Before House Financial Services Committee: "But the critical point for the members of this Committee is that the failures of individual PE-owned companies, while hardly trivial, do not give rise to the kind of systemic risk relevant to policy makers seeking to prevent global financial shocks." (PEC)
1 min read · 17 July 2009
1 min read · 17 July 2009
As usual, we have a week's worth of ratings agency actions on the debt of LBO-backed companies from Standard & Poor's and Moody's Investor Services. This week the agencies were busy withdrawing ratings on bankrupt companies and issuing new ratings on newly-exchanged debt facilities. Almost every action is related in some way to bankruptcy or a distressed debt exchange, which we may as well get used to, because there's a lot of debt out there to be refinanced. To be specific, around $190 billion worth of speculative-grade bonds will mature between 2009 and 2011, according to Moody's. Fortunately $120 billion of that isn't due until 2011. In addition to the downgrades, upgrades and withdrawals, S&P did some outlook revising: The agency affirmed its ratings on Rite Aid Corp. but revised its outlook from ‘negative' to ‘stable.' The company owes its revised outlook to improved liquidity and financial flexibility. Rite Aid, which has investments on Contrarian Capital and Leonard Green & Partners, recently refinanced of the bulk of its 2010 debt maturities, including a new $1.0 billion asset-based revolving credit facility. Currently the company has a ‘B-‘ corporate credit rating.
4 min read · 17 July 2009
As requested, we have posted the full list of 133 LBO-backed companies with CIT in the capital structure below. For reference, yesterday we posted a list of 30-some LBO-backed companies which used CIT as a lead arranger over the last three years. The full list is for the same time period. The difference in size between the types of companies on the lists is striking: yesterday’s list of CIT-led transactions is clearly populated with middle market to lower middle market companies sponsored by likes of Thoma Cressey and Wind Point Partners. But this list shows that CIT’s reach goes all the way to the mega-buyouts. Companies like Michaels Stores, backed by Blackstone and Bain Capital, Dollar General and HCA, backed by KKR, and Dunkin Brands, backed by Bain Capital and THL Partners, fall squarely into the mega-buyout category. Still, the majority of the companies are middle market.
5 min read · 17 July 2009
In Line With Our Question: As to why private equity pros don't blog, MatthewCG asks if private equity "gets" social media? (Not too proud) Trite Money: Breaking down clichés in the world of business. "Animal husbandry enjoyed a brief popularity in M&A work when "milking cows," "geese with golden eggs," and "stuffed turkeys" peppered financial articles and bankers' conversations." (Business World) Newsflash: Goldman Sachs is in talks to acquire the Treasury Department. (Borowitz Report) Want an Autobiographical History of CIT? Here's the company's "CIT Story." They'll have to write a new chapter after this week.... (CIT) Bye Bye Banking: Private equity firms hoping that investments in banks would be the next big thing are discovering that their opportunity has practically vanished as a result of an unexpected stock market rally, proposed new rules that would make such deals less profitable and sober economic fundamentals. (FT)
1 min read · 16 July 2009
Lazard today announced plans to purchase Chicago-based Edgewater Funds, in what is only the third example of a private equity firm takeout that I can think of. This begs an obvious question: Why? The press release says that Edgewater, which makes growth-oriented investments, will "compliment Lazard's Financial Advisory business in the Midwest." Other than Lazard's desire for a Chicago office, this tells us precisely nothing, which is just how press release writers like it. The less-obvious question is: What happens to Edgewater's current efforts to raise $750 million for a new fund? It entered the market last year and has only raised
2 min read · 16 July 2009
Now that the weather has finally warmed up, plenty of M&A bankers are hoping the market for deals will as well (look no further than Goldman Sachs, where YOY M&A fees were down 54% this quarter, for proof). 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. Platinum Group Metals, based in Vancouver, is pursuing strategic alternatives. The business holds a 74% interest in large scale Platinum Group Metals reserve and resource in South Africa. Athabasca Potash Inc., a Canadian business, is using CIBC World Markets Corp. and Genuity Capital Markets to help it look at a potential sale.
3 min read · 16 July 2009
2 min read · 16 July 2009
