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The Great Financial ‘Purge’ Is Over. Bring on the Credit, Please.Morgan Stanley predicts a huge increase in the demand for private credit. In a new report titled, “The Coming Rebound in Credit Demands,” the investment bank refers to the credit crunch as a “financial purging and healing.” Commentators haven’t shied away from the “binge” metaphor when discussing the 2007 boom-era, so I suppose there’s no harm in extending it to the credit crunch. With banks’ balance sheets de-levered and stimulus money in hand, the credit crunch is basically over, the report argues. And that means one thing: Time To Binge Again! According to Morgan Stanley, credit demands, which declined through the fourth quarter of 2010, will bounce back any time now. The report doesn’t directly address leveraged loans, but we know the issue of credit availability is certainly near and dear to the hearts of all general partners (whether they admit it or not). We’re already seeing increased credit demands from private equity with lenders meandering back to the table and deal volume picking up slightly.
- The Carlyle Group Goes Green
In a move to clean up private equity's image (and save a little money in the process), The Carlyle Group has followed in KKR's footsteps by partnering with the Environmental Defense Fund. But while KKR's partnership served to "green up" a small handful of its existing portfolio companies, Carlyle has gone even greener. (And right around St. Patty's Day! They're related, right?) The mega-buyout firm, in partnership with the Environmental Defense Fund, will implement something called "Eco ValueScreen." It's a due diligence process that identifies places for improvement as well as that holy grail of "value creation" in acquisition targets, all with the purpose of reducing a company's environmental impact. The screen was developed by Carlyle and EDF alongside environmental consulting firm The Payne Firm. The firms haven't estimated any exact savings figure for Carlyle, but the idea is that the screen goes beyond basic risk mitigation in the diligence process Further, other buyout firms will be able to implement the screen for their own diligence processes.
- VCs Stuff More Companies Into IPO Pipeline
Financial Engines priced its IPO above range last night, and just closed its first day of trading up nearly 44 percent. It was the fifth VC-backed IPO to price in 2010, and the third to do so since we last looked at the VC-backed IPO pipeline /63772/vc-backed-ipo-pipeline-fills-up/ (the others were pharma companies AVEO and Anthera). There also have been four new additions to the pipeline in the past month, including the recent filing from Broadsoft. That works out to a net total of 38 VC-backed companies in registration to go public on U.S. exchanges, representing more than $4.5 billion in targeted raise. View the entire pipeline after the jump...
- PE Community Helps Launch City Year London
Long before I knew the difference between a general partner and a limited partner, I was a Boston corps member with City Year. It's a nonprofit organization that served as the model for Americorps, and now mostly focuses on reducing the dropout rates in urban schools (back in 1994-1995, I was primarily involved in physical services like demolishing an abandoned crack house). In the years since, I've learned that private equity is an integral part of the City Year equation. Longtime board members include PE pros like Josh Bekenstein (Bain Capital) and Steve Woodsum (Summit Partners), and nearly 100 PE pros showed up last November for a City Year breakfast headlined by David Gergen. The latest example came this morning, when the UK-based Private Equity Foundation and TowerBrook Capital Partners announced that they are committing £1.42 million to help City Year launch a London corps.
- Club deals making comeback
However, they’re looking slightly different than they were five years ago
- PE Debt Watch (Upgrades & Downgrades)
As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies from ratings agencies Moody’s Investors Service. This week Moody’s has some distaste for the Intergraph dividend recap, downgrading the company’s corporate family rating and calling the payment, which increases the company’s leverage by one and a half turns, “aggressive.” Company: HCA Inc. Sponsor: Bain Capital, KKR. Action: Moody's Investors Service assigned a Ba3 rating to the company’s proposed offering of $1.0 billion of first lien senior secured notes due 2020. Moody's also affirmed the existing ratings of HCA, including the B2 corporate family and probability of default ratings. Highlight: "Much like the secured note offerings completed in 2009, the current transaction continues to chip away at the considerable amount of bank debt scheduled to mature in the 2012 and 2013 time frame," said Dean Diaz, Vice President -- Senior Credit Officer at Moody's.
- PE-Backed Sungard Adds On
SunGard has acquired 365 Hosting Limited, a Dublin, Ireland-based cloud computing and data centre services company which trades as ‘Hosting 365’. Terms were not disclosed. SunGard was acquired for $11.4 billion in 2005 by Bain Capital, Blackstone Group, GS Capital Partners, KKR, Providence Equity Partners, Silver Lake Partners and TPG Capital.
- Sensata Shares Rise on Debut
Hopes for a recovering auto industry buoyed car parts maker Sensata Technologies Holding (ST.N) in its market debut on Thursday, sending its shares up as much as 5.6 percent.