Private Equity
Oak Investment Partners is confident it will close on $1.5 billion for its eighth thirteenth venture capital fund in the coming weeks, a source tells peHUB. At $1.5 billion, the fund would be a significant drop from its prior pool of capital, a $2.56 billion fund that closed in 2006. That even an established venture firm like Oak Investment Partners would lower its fund size during the current environment is no surprise. Recently, fellow venture capital giant NEA cut its fund target from $3.5 billion to $2.5 billion because of difficulties in the market. Moreover, Oak recently took a beating from VentureBeat, which said some of its investments looked “extremely risky, if not ridiculously so.” The article named HuffingtonPost, Babystyle, Visto
1 min read · 13 May 2009
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. I can't be comprehensive, but I can try. Here is last week's list; send any additions my way. Madison Square Garden: The arena's parent company, Cablevision, may spin off the unit as a result of shareholder pressure. Read more... Exxon: The company may sell 800 Australian fuel outlets as part of a strategy shift away from fuel retailing, according to reports. Patriot Capital: The BDC is exploring strategic alternatives because one of its credit facilities was terminated after its collateral declined in value.
4 min read · 13 May 2009
Get Funded: What types of innovation and invention might attract funding dollars in the downturn? (BusinessWeek) Vindication: The FT points to the secondary market issues we've been writing about, including negative premiums. They've called private equity a "trap," but didn't allude to the real trap (US safe harbor laws). (FT) Tax Man: How Obama's tax plan hurts private equity-and we don't mean carried interest, we're talking about debt. (Deal Journal) Stock Analysis: TPG made money on J. Crew, did you? (Investopedia)
1 min read · 12 May 2009
Any private equity investor facing cash constraints would have read this story from Reuters in complete horror. The article, from this morning, proudly declares that private equity is getting ready for its comeback. The so-called "haves" of the buyout world--the funds that raised money before raising money became impossible--are gearing up to put all that sidelined capital to work. "There are plenty of private equity firms with significant funds available to invest and a growing impatience to invest them," said Michael Berry, head of debt advisory firm Versatus. Once those firms start putting money to work, as we're already starting to see with deals like KKR's buyout of Oriental Brewery and CVC Capital's deal for iShares, industry pros expect there to be a period where investors shell out millions of dollars to fund capital calls but receive no distributions from exits.
2 min read · 12 May 2009
Julio Ramirez, a former placement agent at Wetherly and, a month ago, Blackstone Group, is the latest to become entangled in the New York State pension fund pay-to-play scandal. Ramirez has plead guilty to a criminal misdemeanor charge, the Wall Street Journal reported, citing anonymous sources. An announcement from the New York Attorney General is expected. Ramirez is accused of being part of Hank Morris' "'national network of actors who often acted in concert across the country' to help firms secure investments from pension funds and allow agents to collect lucrative fees." Ramirez accepted the fraudulent fees while he was working at Wetherly Capital Group in Los Angeles, sometimes funneling the money through his company Ramirez Partners. In 2005, Ramirez joined to Park Hill Group, a placement agent owned by Blackstone Group, as its sole Los Angeles partner. In April peHUB reported that Ramirez had left Park Hill for reasons unclear. He announced his intention to leave in January and his last day was March 31, but said nothing of the investigation. The spokesperson said after his departure, rumors began to swirl and Blackstone did an internal investigation into his work while at Park Hill. The firm concluded Ramirez did not violated the firm's "high standards of conduct" or "evaded our rigorous controls." Read more coverage of the New York Pay-For-Play Scandal here.
1 min read · 12 May 2009
2 min read · 12 May 2009
Madoff Junkies: Behind the banks and asset managers which lost money, some names appear again and again. (Dealzone) Start Worrying: Infrastructure isn't taking off like it should, PE pros say. (Dealscape) Happy Mothers Day: And by the way, when it comes to investing, women feel it is much more important than men did to avoid incurring large losses, falling below a target rate of return and acting on incomplete information. (WSJ) Operational Shift: No surprise that this private equity survey reveals a shift to operational performance improvement for buyout firms. (Roland Berger)
1 min read · 11 May 2009
2 min read · 11 May 2009
As the deleveraging process continues, yet another over-levered buyout-backed company faces a covenant breech. GS Capital and Onex Partners-backed aircraft maker Hawker Beechcraft is expected to inject more cash into the company, according to Debtwire. The company has “burned through” $140 million in the past five weeks and is expected to fully draw down its revolver to buy back bonds before GS Capital or Onex infuse any more cash, the news service reported. An injection of cash, above the firms’ $1 billion equity check in 2007, is expected in exchange for covenant relief. This indicates the company’s backers aren’t planning to push it into Chapter 11. Last month S&P lowered the company’s corporate credit rating to ‘B-’ from ‘B+’. The ratings agency cited the potential for distressed redemption offers for the company’s debt as one reason for the downgrade. Amendments and exchange offers are becoming more common as buyout-backed companies seek to avoid costly bankruptcy proceedings. The trend could very well strengthen after the U.S. government managed to turn the entire Chapter 11 bankruptcy process on its head this week.
2 min read · 11 May 2009
Buyout firms should really avoid messing with nostalgia-shrouded companies. When they do, they run the risk of falling into an unsavory PR battle. At least that’s how things have played out with Brynwood Partners’ investment in Stella D'oro Biscuit Company. The 79-year-old Bronx company’s workers have been on strike ever since Brynwood cut its bakers wages and vacation days ten months ago. Their chant? “No Contract, No Cookies.” According to a story in yesterday’s NY Post, Brynwood is “slowly squeezing the life out of the city jewel by having inexperienced replacement workers produce poor quality cookies as they pursue their profits.”
2 min read · 11 May 2009
