On August 17, Henry Kravis gained new insight into quarterly reporting – as the director of publicly traded KKR Private Equity Investors, he participated in a teleconference and webcast to discuss the company's activities and performance since its Amsterdam Euronext listing last April.
On the other side of the line, an unknown number of KKR PEI “unit-holders”, as well as curious eavesdroppers, gained insight into private equity generally and Kohlberg Kravis Roberts, specifically. They learned that they were unit-holders in an asset class with major restrictions on information sharing, and that no firm adheres more strictly to these rules of discretion than KKR.
The call started off with information that was likely already known to all. “My name is Henry Kravis, co-founder of KKR,” said Kravis.
Kravis stayed entirely on message as he described his optimism that KKR would continue to be able to close very large and attractive deals around the world, and that his firm's professionals were excited to be “creating long-term value” for KKR PEI unit-holders.
A rundown from the CFO essentially restated items in a previously released earnings announcement. Then it was time for questions.
The first was from an ABN Amro call participant, whose question seemed to indicate a lack of understanding about the difference between a direct investment and a fund commitment. Kravis patiently explained that the $1.9 billion committed by KKR PEI to the KKR 2006 fund would be drawn down gradually.
Next up was a questioner from Merrill Lynch. How long would cash be tied up in the KKR 2006 Fund?
Another question came from a principal of hedge fund Akana Capital, who wanted to know how KKR priced its $419.5 million secondary acquisition of interests in KKR funds. The principal was told that a “fair value” was assigned to the interests, but that all other details were confidential.
A caller from SAC Capital, among the world's most powerful hedge funds, had a question, rather sheepishly delivered – could Kravis give any details about a reported bid for Australian retailer Coles Myer? For example, what percentage might KKR buy and who might it partner with? Kravis noted that it was a “good question, but unfortunately we can't comment on market rumours.”
The SAC caller retreated with a quick, “okay.”
MAGNETAR HIRES FORMER APOLLO EXECUTIVE
Hedge fund Magnetar Capital has hired Michael Gross, formerly of Apollo Management, as a senior partner and co-chairman of the firm's investment committee. In 2004 Gross founded Apollo Investment Corp, and as chairman and CEO led the listing of Apollo Management, the largest IPO of a business development company. Gross has been busy since he left Apollo. In May he filed to take public a “blank check” special purpose acquisition vehicle called Marathon Acquisition. The vehicle, with a target of $300 million, will acquire one or more operating businesses and then seek a listing on the American Stock Exchange, according to SEC filings.
LIBERTY PROS DEFECT TO FORM RIVAL
Liberty Partners, a New York middle- market buyout firm that primarily manages the capital of the Florida State Board of Administration, has lost two managing directors, who announced today the creation of a new firm. Paul Huston and Stephen Fisher have left Liberty Partners to form Hudson Ferry Capital. Joining the two are Liberty Partners vice president Timothy Ross, Kenner & Company managing director Mark Deutsch and GE Antares Capital managing director Bruce Robertson. Kenner & Company is a New York private investment firm that concentrates on home building products, while GE Antares Capital is a division of GE that provides financing to middlemarket transactions.
CARLYLE CONFIRMS LOSS OF HEALTHCARE CO-HEAD
Bob Dahl, the co-head of Carlyle's healthcare buyout team and a managing director for seven years, has left the firm “to explore some different options,” according to a Carlyle spokesman. Dahl departed the firm late last month, confirmed Christopher Ullman, Carlyle's director of global communications. Ullman said he did not know the specifics of Dahl's future plans, but said he was looking “to explore some different options.” Karen Bechtel, the remaining co-head of the global healthcare team, will carry on as its sole head. She joined Carlyle in July 2005 after 28 years at Morgan Stanley.
EQUIFIN HIRES IR PRO
Renwick Paige has joined the New York-based private equity firm after a stint as chief marketing officer of law firm Preston Gates & Ellis. Before joining Preston Gates, Paige was active in private equity fundraising for four years at JP Morgan, where he raised over $10 billion for alternative investment funds such as JP Morgan Partners, Moore Strategic Value Partners Japanese Restructuring, and Blackstone Capital. Equifin focuses on the financial services industry, and its principals have managed equity investments of $1.3 billion in the form of startups, turnarounds, buyouts and growth equity
FLOAM TO HEAD NEW CARL MARKS UNIT
Carl Marks & Co. has launched a new investment unit that will focus on underperforming privately-held companies with an enterprise value between $10 million and $50 million. The unit, Carl Marks Merchant Banking Partners, will be led by Dennis Floam, a former vice president with Philip Morris Companies. Floam stressed that the new unit will be entirely separate from the activities of the rest of Carl Marks & Co. The New York firm currently invests in three distinct areas: traditional leveraged buyouts focused on the government and commercial services sectors, distressed debt investments and real estate investments. The new unit will focus on smaller, underperforming companies, adding a fourth area to the firm's operations.
DASCHLE DITCHES APOLLO
Just one month after joining business development company Apollo Investment on the board of directors, former US Democratic Senator Tom Daschle abruptly resigned. A press release noted that Daschle's “resignation was due to other commitments that made him unable to continue”. The former Senator from South Dakota, who was recently voted out of office after 25 years, is believed to be preparing for the upcoming presidential race. Publicly traded Apollo Investment is an affiliate of Apollo Management.
WELSH CARSON NAMES OPERATING EXECUTIVE
New York private equity firm Welsh Carson Anderson & Stowe has named a former First Data Corp. executive as its new senior operating executive. Richard Aiello was previously senior vice president of strategic investments at First Data, where he oversaw all merger, acquisition and joint venture activities, according to a statement. At Welsh Carson, Aiello will help identify deals and assist with the oversight of portfolio companies. His appointment is part of a string of high-level hirings of operating executives within private equity firms. First Data was previously a portfolio company of Welsh Carson. Aiello has also worked at Card Establishment Services, which was acquired by First Data in 1995.
EDISON NAMES HEAD OF BUSINESS DEVELOPMENT
Edison Venture Fund, based in Lawrenceville, New Jersey, has promoted Donna Usiskin to director of business development. In addition, the firm has hired Dahlia Kang as a business development associate. The two will “cultivate relationships with referral sources such as attorneys, accountants, bankers, investors and other service providers”, according to a statement. Prior to joining Edison in 2003, Usiskin was vice president of sales for Connextive, a former Edison portfolio company. The firm has additional offices in West Chester, Pennsylvania and McLean, Virginia.
PALUMBO TO LEAD ACCEL-KKR ATLANTA
Accel-KKR, a joint venture between venture firm Accel Partners and buyout firm Kohlberg Kravis Roberts, has opened a new office in Atlanta, Georgia. The firm already has offices in Menlo Park, California. The new office will be led by managing director Rob Palumbo. In a statement, Palumbo said: “Atlanta and the southeast are increasingly attractive technology markets.” The joint venture was launched in 2000 initially as a vehicle for helping old economy companies transition into Internet businesses. It is now a private equity firm that pursues more mature technology businesses.