Private Equity
Hexion and Huntsman: The deal that never ends. One party is now being haunted by the other in loan negotiations. (Debtwire) At Least Someone Does: A teacher is using the AIG backlash to teach kids compassion. Now they're making cards for AIG employees that say "Keep working hard, dudes! Keep eating your vegatabos!" (Clusterstock) Also From There: Google Health records is just perpetuating antiquated technology. (Cs) Mark To Market: We know, bear rallies hurt the mark-to-market valuations of Public stocks too. Here is exactly how. (WSJ)
1 min read · 13 April 2009
Quarry Capital has proven that with a little perseverance, a first-time fund can do its first-ever deal in even the most volatile deal-making market. Granted, it's a very small deal. But the firm is happy to take Royal Pet Supplies off its owners’ hands. Quarry will acquire 100% of the family-run company and its owners will retire. Brent Johnstone, Managing Director with Quarry Capital, said that while the pet supply industry is not necessarily “recession-proof” it is “recession-resistant.” Royal Pet Supplies distributes pet supplies to independent pet shop operators, who he said have been stable through the recession. "People are still spending money on their pets because it is a place of comfort and a source of happiness."
2 min read · 13 April 2009
The Carlyle Group’s third Asia buyout fund may be lucky to meet its target. According to a regulatory filing dated March 16, Carlyle Asia Partners III has raised $1.927 billion from 89 investors, after being formed in 2007 with a listed target of $5 billion. However, I’m pretty sure that’s an optimistic hard cap, since Bloomberg reported it at $4 billion target back in February '08. That same story quotes sources as saying the firm hopes to wrap up fundraising by mid-year ’08. Clearly, times have changed.
2 min read · 13 April 2009
Here's a look at the past week's scoops, opinions and analysis from the peHUB blogging team. In good news, Dan announced peHUB's first "content" event: The LP Congress. Hoorah. Now for the bad news... In the land of buyouts, we started the week with a handy chart of all of the buyout firm mark-downs we could get our hands on: Write-Down Roundup. Speaking of write-downs, Goldman Sachs lost more than half of investors money in distressed debt plays. How will Apollo, Blackstone and other funds fare? Speaking of Blackstone, the firm's distressed real estate fund is still in the market, and its European real estate fund has all but closed. On the flip side, BDCs are so desperate they might take money from an equally desperate asset class: the SPACs. Meanwhile, one PE firm is suing another over a bankruptcy, and Dan discovered that deep down, it was all about the fees for Levine Liechtman v. Apollo. We analyzed the financial impact of Sun Capital's 10 bankruptcies in Staring at the Sun: A Look at the Equity Checks from Sun Cap's Bankruptcies. Perhaps those companies could use some help from the new turnaround advisory firm on the scene, Conjoin Group. Topping off the bad news is a wrap-of the week's S&P and Moody's downgrades, including my rant against ratings withdrawals. Oh, and distressed M&A is at a five-year high. Behind the scenes, kickback scandals aren't limited to New York: The head of the Illinois Teachers' Retirement System stepped down yesterday amidst corruption. On the venture capital side, Connie reported that a company called ReputationDefender is in the market for more venture money. The company helps prevent people from being trashed online. A post on the exodus of talent from VC firms sparked a bit of a debate among commenters: The VC Exodus Continues: Polaris Partner Leaves to Start Own Company. TouchCommerce, a company with a unique pay structure, raised another $10 million. DFJ Gotham is rolling along in fundraising for a much larger fund than its last. Speaking of fundraising, Dan has the story behind Highland Capital's fund size reduction in a story called Smaller & Smarter. Another fund, Bertram Capital, pushed its fundraising back. We posted two Q&As: One with VC recruiter Jon Holman, who said VC job shrinkage is in the early stages. The other was with former Cardinal Health president Hank Struik, who recently joined Water Street Healthcare Partners to, as he said "find his next job." He might have better luck abroad, as CFOs in Europe make more money than their American counterparts. Joanna Glasner reports that business plans are a waste of time. And I was amazed that Segway created a vehicle even more ridiculous looking than its namesake product. And of course, First Read and Second Opinion covered plenty of ground, including articles on Wall Street Tourism, Bailout Art, increased confidence in Silicon Valley, the "Obama effect" on private equity, finger pointing over Huntsman/Hexion, and downgrading Meredith Whitney.
3 min read · 10 April 2009
Happy Three Day Weekend! Oh Man: The AP is losing this war and "quickly becoming the RIAA of the news industry." From Techcrunch: A country radio station in Tennessee, WTNQ-FM, received a cease-and-desist letter warning from an A.P. vice president of affiliate relations for posting videos from the A.P.'s official Youtube channel on its Website. (Techcrunch) Henry Blodget: Is GE Capital is just another Bear Stearns with a friendly logo? (Clusterstock) Get Ready: The author who predicted crisis sees inflation ahead. (But then again, is track record really a solid predictor for future performance?) (Reuters) Hummer Sputtering: The offers for GM's Hummer brand, which include some private equity firms, have come down significantly. What, people don't want to drive gas-guzzling luxury vehicles in a recession? (Dealzone) Now Hiring: Laid off Wall Streeters are interested in Uncle Sam's Fed job fair. (Bloomberg)
1 min read · 09 April 2009
The Blackstone Group has gathered enough commitments to close its European real estate fund at €3.094 billion, according to a regulatory filing. The fund hasn't officially closed but is poised to do so soon. Previously, trade pub Private Equity Real Estate picked up that Tony James mentioned the fundraise in an August earnings call, saying it was "very successful." A Blackstone spokesperson declined to comment on the fund. The filing states that Blackstone Real Estate Partners Europe III LP was formed in October 2007, and gathered commitments from 69 investors. LPs included IPennsylvania PERS ($200m) and CPP Investment Board.
1 min read · 09 April 2009
As usual, we have a week’s worth of downgrades PE-backed company debt from Moody’s and Standard and Poor’s. (It’s a day early this week as tomorrow is a holiday.) This week there are only four, two of which were followed by withdrawals. As these withdrawals -- which happen “at the company’s request” -- increase, I'm starting to wonder about the ratings agencies (which naturally take their fair share of the blame for the credit crunch). I don’t like the idea that if a company doesn’t like what’s being said about its debt, it can make one phone call to silence the critics. It’d be like a public company dropping an analyst that rates it a “sell.” It’s unfair to debt holders.
3 min read · 09 April 2009
Oops: Did lawyers from New York's elite Wachtell, Lipton, Rosen & Katz mess up the Hexion Specialty Chemicals/Huntsman situation? Deal Journal reports yes, through "an operatic series of bad decisions and miscalculations." (DJ) While Everyone Sits On Their Hands: Sullivan and Cromwell says, "Deals are always risky, but doing nothing in a downturn may be the riskiest move of all." (BusinessWeek) Opposite Day: Yesterday we learned about "Obama-friendly" PE investing. Here's one company ideally suited not to prosper under the new administration. (Slate) Rule #1 of Pirate Negotiating: Don't give up your hostage (especially if it's the only one you have) before they do. According to reports on the ongoing saga: "After negotiating with the pirates, the civilian crew released the one pirate they had, expecting the pirates to release the captain, the sources added, but that did not happen." Ouch. (MSNBC)
2 min read · 08 April 2009
Today Water Street Healthcare Partners announced it hired Hank Struik as a senior executive advisor. Struik is the former president of Cardinal Health, an $11.5 billion pharmaceuticals and medical products company. Struik joins the Chicago-based firm six months after it closed its second fund with $650 million in commitments. Very little has been deployed to date, and Struik has come on board with a pretty straightforward mission: ‘Here’s $100 million from our fund, now find us a medical products deal.’ I spoke with him briefly this afternoon on globalizing medical products, why the industry is not recession-proof, and what buying opportunities he sees.
3 min read · 08 April 2009
Somehow, Segway managed to create a vehicle that’s even more ridiculous looking than its namesake product. The company, which has $175 million in venture backing, yesterday announced its partnership with GM to make what they call “a two-wheeled, two-seat electric vehicle designed to be a fast, safe, inexpensive and clean alternative to traditional cars and trucks for cities across the world." As someone who rides a different two-wheeled urban alternative to cars (ahem, a bicycle), I have to say this thing looks like it’d only make traffic more chaotic, confusing, and dangerous (watch a CNBC video below). It looks a bit like those electric auto rickshaws that add to the chaos of East Asian street traffic. Of course, I have always been a bit of a skeptic when it comes to trendy consumer-facing companies. And at
1 min read · 08 April 2009
