Private Equity
Regardless of whether you believe the market bottom is real or red herring, the year's IPOs have performed well -- a fact not lost on exit-hungry private equity firms. This year, the rare PE-backed IPOs have come from the middle markets (Bridgepoint Education, Rosetta Stone), even though it's the mega-buyouts that need them most. With portfolio company valuations starting at $5 billion, an IPO is often a mega-firm's only way out. If any PE-backed company is positioned to go public, it's KKR's discount retailer, Dollar General. Speculation on the transaction began in January, when Breakingviews argued that the company was worth $7.5 billion (minting KKR better than a 33% return, according to the story).
2 min read · 15 June 2009
Not Afraid Of Employee rants: Nokia set up an intranet soapbox last spring known as Blog-Hub, opening it to employee bloggers around the world.(BW) Inside The Startup Office From Hell: Frank Addante, the Los Angeles tech entrepreneur, has helpfully consolidated pretty much every terrible office idea and Web 2.0 startup cliché into one place: This video tour of his online ad company, Rubicon Project. (Valleywag) Contradictions: The Shrinking VC world isn't scaring off business grads. (Venture Dispatch) Meanwhile: MBAs have "downgraded" their expectations for careers. I.E., being realistic? "Many are rethinking ambitions, trading dreams of high-paying careers in hard-hit fields like investment banking for positions in less-battered sectors." (WSJ)
1 min read · 12 June 2009
2 min read · 12 June 2009
As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies. This week we finally say goodbye to Chrysler once and for all, as the company emerges from bankruptcy and Cerberus officially loses its investment. Meanwhile, auto parts maker Dana Corp., backed by Centerbridge Capital, was downgraded and, in a curious twist, Harrah’s was upgraded. Despite the excitement around Harrahs’ successful debt offering, I’m not rushing to remove it from the “Top Ten Worst Deals of 2008” list yet. Company: Dana Holding Corporation Sponsor: Centerbridge Capital Partners LP Downgrade: Moody’s lowered the company’s corporate family rating to Caa2 and its probability of default rating to Caa1. Highlights: “On May 8, 2009, Dana commenced a tender offer for a portion of its outstanding senior secured term loan at a deep discount to par value. The company's PDR and the rating on the term loan were adjusted to Ca at that time to reflect the potential for loss to investors. With the passage of time since the May 12 target date for concluding the tender, Moody's has now repositioned the PDR at Caa1.”
3 min read · 12 June 2009
A Daring Trade Has Wall Street Seething: Texas Brokerage Firm Outwits the Big Banks in a Mortgage-Related Deal, and Now It's War. (WSJ) Was is smart or conniving? Deal Journal breaks it down. (Deal Journal) The Drinkable Portfolio: As an investment, wine has outperformed the market and delivered handsome returns. What you need to know about liquid assets. (WSJ) Bold: Venezuela has banned Coke Zero, saying its poses a health danger. (Reuters) Welcome: Shanghai has opened its doors to private equity firms establishing wholly owned units in the city. (DJ) LP Churn? Private Equity pros are going to have to fund new investors, according to a new survey. (Dealscape)
1 min read · 11 June 2009
1 min read · 11 June 2009
This morning’s news that Riverstone Holdings will pay $30 million to the New York State Common Fund left me a bit puzzled. Just a few weeks ago, Riverstone’s partner, The Carlyle Group, paid the pension fund $20 million for its role in the same kickback scandal. Setting aside the message this “settlement” system sends (buy your way out of trouble!), why does The Carlyle Group get to pay $10 million less than Riverstone? Is Carlyle a less bad actor? Are the $20 million and $30 million totally arbitrary? As it turns out, no. The $30 million and $20 million settlement fees represent the management fees New York State Common paid to each firm for the three funds alleged to have received commitments via a pay-to-play scheme. The firms managed to bill their investors with perfectly round numbers, it seems.
2 min read · 11 June 2009
May was a big month for junk bonds: More than $15.9 billion worth of the high yield notes were issued, which was the highest monthly total since June 2008. That figure includes issuances from several buyout-backed companies, including large offerings from Harrah's Entertainment, Apria Healthcare and Gibson Energy Holdings. Buyouts' Ari Nathanson wrote that the action offers a glimmer of hope that investors might be more comfortable with risk, and perhaps hungry to invest in high yield debt for new leveraged buyouts. I'm wondering if it's not based on risk appetite at all, but simply reflects a desire to invest in anything. Some of these issuers go beyond "risk." Harrah's, for example, raised $1.323 billion worth of junk bonds, an increase from the original plan to sell $1 billion. Since its debut, the company's notes traded at a respectable 96 to 97 cents on the dollar.
3 min read · 11 June 2009
This is Just Wrong: What kind of genius does it take to turn $517 million into $75 million over the course of 39 months? That's what Talbots did and Golden Gate Capital capitalized on. (Footnoted) Peter Theil: At a conference, he calls the tech boom of the late 90s a fraud. (Valleywag) What's Wrong With Financial News on Television: Proof that nobody at Fox Business News knows what's going on, at all. (Gawker) Just Depressing: Now that the U.S. taxpayers are minority shareholders in Citigroup, we might be happy to learn that the company is using its resources to sue a networking website called Womenco.com, because its similar to Citigroup's own "Women & Co.," a money managing business. Christ. (Cityfile) Regulatory Shopping: Private equity firms are using Regulatory Arbitrage. Writes Money Morning, "The financial Barbarians are at the gates of the U.S. banking sector." (MM) Private Equity: Not so shareholder friendly? (<a
2 min read · 10 June 2009
2 min read · 10 June 2009
