Private Equity
As the weather (slowly) warms 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, many others) are either formally considering “strategic alternatives,” reported to be on the block, or rumored to be in sale talks in the past week. I can’t be comprehensive, but I can try. For prior lists, see below, and send any additions my way. Cox Communications has announced it hired Goldman Sachs to advise it in the possible sale of subsidiary Travel Channel Media. The unit includes the Travel Channel television network and travelchannel.com. Google is still acquisitive for small companies. The firm's acquisition strategy will focus on the cloud, mobile, and open source distribution of software sectors.
3 min read · 10 June 2009
Wilbur Ross on The Auto Industry: "Wilbur Ross sees trouble for suppliers who will need to restart parts production after Chrysler LLC and General Motors exit bankruptcy." (Auto News) ARRR: Footnoted.org finds evidence of pirates in SEC filings. (Freeseas) Barry Ritholtz: How to fix financial television. (The Big Picture)
1 min read · 08 June 2009
3 min read · 08 June 2009
Arcapita has agreed to sell restaurant operator Church’s Chicken to Friedman Fleischer & Lowe, according to a source close to the situation. The deal, advised on the sell side by Bank of America, represents a rare exit of a stable, growing company. Church’s Chicken has annual revenues that have grown between 8% and 10% through the recession as consumers trade down to less expensive dining. Within the past two weeks, San Francisco-based Friedman Fleischer was selected as the winning bidder from an auction that started with as many as ten buyout suitors, the source said. In April peHUB reported the sellers had narrowed the bidding pool to three or four parties. At the time, Atlanta-based Arcapita was seeking a full valuation of up to 8x Ebitda for the company.
2 min read · 08 June 2009
Here's a look at the past week's scoops, opinions and analysis from the peHUB blogging team. Tagg Romney's Fund Nears Its Target Fundraising Updates: EIV, Lenox, CapitalSouth, Alerion Welsh, Carson, Anderson, Stowe Wraps Fund XI At $3.7B Centerview Closes Debut Fund Just Above Target's Halfway Point Patriot Capital Takes 8 First Round Bids, None From Fifth Street New Cartesian Business Finds Visibility in the Eye of the Storm Mercato Partners Takes A Practical Approach to Venture Capital Q&A with Josh Kopelman: I Never Wanted to Be a VC Who Offers "Long, Drawn-Out Maybes" Heesen Says Cleantech Still Hot New Firms Must Get Creative To Do Deals: Meet Current Capital WaveRunning Wolpert On a Mission NFL Player Getting His Kicks From VC Drew Bledsoe Throws Private Equity Pass KKR Gives A Peek LP Options When GPs Go Bad Private Equity Dry Powder At All-Time High Are Bank Buyouts Signs of Strategy Drift? Oh Well, No PE Owner for Hummer I Have an Issue With S&P Where's The Beef? Showdown in Texas, as Former Colleagues Fight Each Other Over Clawbacks VC-Backed Bust: Proficiency Inc. RNC PR Director Calls Mark Zuckerberg's Sister "Totally Full of Sh*t," Then Backpedals: "I LOVE Facebook" E Ink Acquisition: Great for E-Book Readers; Not So Great for Company's Backers What Financial Services VCs Worry? On Twitter, Bromance Thrives Ron Conway: Arrangement with Baseline Ventures Still Friendly, Really SEC Now Probing Its Own Staff Around Mark Cuban Investigation Cranium Cofounder Starts Rechargeable Battery Company, in Ghana Reed Returns to CRV, Wither Lowenstein in Boston? Weekly Downgrade Wrap-Up (Upgrades Galore!) Midweek M&A Madness The Impending Demise of the University Doubling Your Money on Jimmy Choo The GM Magic Act The Tyranny of Cost-Benefit Analysis Thanks to the Grumpy VC Hybrid IPOs (HIPOs?) Why China Isn't the Next Silicon Valley Beware the Complicated Deal Web 3.0 Something for Nothing OpenTable - VCs Waste Another IPO New England's Top 10 Innovators Keep Browsing: peHUB Rewind May 29, peHUB Rewind May 22, peHUB Rewind May 14, peHUB Rewind May 8, peHUB Rewind May 3, peHUB Rewind April 17, peHUB Rewind April 10, peHUB Rewind April 27
2 min read · 05 June 2009
Book Smart vs. Street Smart: "White-collar fugitives often fail to escape the law because of what prosecutors and bounty hunters say is a lack of preparation for the rigors of life on the lam." Brilliant. (Bloomberg) Showdown!!! Venture Capitalists are about to turn in private equity players: "The venture capital industry is gearing up to fight against raising the tax on carried interest. A key battle is differentiating itself from the private equity industry." (Bits) Rate Shopping: The nerve. Moody's is complaining that TALF is causing issuers to "shop" for credit-ratings, or seek the highest ratings with the lowest standards, according to Moody's Corp. (Bloomberg) Forced Default: Clear Channel's lenders want a forced default. Ouch. (FT) Closer Look: "The Worrying Wall of Debt" (The Deal) Movie Stars: They've casted a man to play Bernie Madoff in an upcoming movie. (Cityfile)
2 min read · 05 June 2009
In April, small-market lender Patriot Capital Funding announced it was considering strategic alternatives. What the struggling BDC (business development corp.) didn't say was that the company had already shopped itself widely and was kicking off a full auction. Last week, Patriot took first-round bids from eight parties, according to two lending sources who asked not to be named. One source said the bidding pool included two or three fellow BDCs and one private equity firm, adding that bids ranged from $2 per share to "full valuations" of $3 per share. As of 2pm this afternoon, Patriot Capital was trading at $1.91 per share, or a $40 million market cap. A year ago, the BDC's shares traded at more than $9 per share, but in recent months, Patriot Capital has met difficulty. In April one of the company's credit facilities was terminated because the value of assets provided as collateral had dropped.
3 min read · 05 June 2009
As usual, we have a week’s worth of ratings actions on the debt of private equity-backed companies from Standard & Poor’s and Moody’s Investor Services. This week was a good one for debtholders, as a number of companies saw their debt ratings upgraded. But on second thought, it wasn’t that great, since most of these upgrades are post-distressed-debt exchange. After an ‘SD’ (selective default) rating, there’s nowhere to go but up, and in a distressed debt exchange, someone has to take the short end of the stick, and it’s usually not the equity holder. Certainly not an ideal situation, but as I said last week, we’re only at the tip of the distressed debt exchange iceberg (despite oddly successful issuances from the likes of previously unpopular companies like Harrah’s). Get ready for a very cold few years… Company: Brigham Exploration Co. Sponsor: DLJ Merchant Banking Partners Update: S&P affirmed its 'CCC+' corporate credit rating on the oil and gas exploration and production company. It’s been removed from the Weakest Links list because the outlook is developing. Highlights: “The affirmation follows the company's announcement that it has received net proceeds of roughly $94 million from an equity issuance. Although the pro forma liquidity profile is much improved, we are concerned that liquidity could become tight in the fourth quarter of 2009 or first half of 2010 due to low natural gas prices and an increased capital budget.”
4 min read · 05 June 2009
In a world of uncertainty, Cartesian Capital Group is betting on one thing it knows hasn't changed: natural disasters. This week the firm launched operations for its new catastrophe reinsurance business, called Iris Reinsurance. The business will be led by Chase Toogood, formerly with Credit Suisse and ACE Capital Re, and Schuyler Havens, formerly of Freestone Capital Management. Cartesian Capital, which typically makes investments of between $40 million and $125 million, contributed to Iris Re with capital from its first fund, alongside contributions from outside investors. Cartesian Capital's private equity operations continue to invest from its first fund, Pangaea One LP, a $1.05 billion pool closed in 2007 that is 55% deployed. Cartesian may be the first buyout firm to fulfill a year-end prediction from Reuters that private equity firms would flock to the reinsurance business for private equity-like returns of around 20%. I spoke with Cartesian Capital's Managing Partner and co-founder, Peter Yu (who also founded AIG's private equity business) about why he expects to outperform that estimate, what private equity has in common with reinsurance, and the industry's true market dislocation.
4 min read · 05 June 2009
Bummer: How does the busted Rio-Chinalco deal hurt Blackstone Group? As advisors to the deal, they drop nine spots on global M&A ranking without it. (Deal Journal) Made Up His Mind: Roberto Cavalli finally decided to sell a stake to a buyout firm. (WSJ) This is a Problem: Dennis Berman does the math on the U.S. taxpayers' investment in GM and concludes that, short of a magic trick, we won't be getting that money back. Pretty much ever. (WSJ) Reviews: Here's an in-depth review of Pete Peterson's new memoir. (Reuters) MBA Report: "In year of unprecedented market downturn, seniors flee finance and consulting for education and health." (Harvard Crimson)
1 min read · 04 June 2009
