Financial sector stocks have fallen, causing many to wonder whether a handful of high-profile private equity deals were ill-timed.


Three PIPEs to make you nervous
Company name PE sponsors Equity at risk Per-share Lowest recent Price at Discount to
purchase price* share price press time purchase price
MBIA Warburg Pincus $800m $23.93 $3.62 $5.93 -75%
Washington Mutual TPG (lead investor) $2bn $8.75 $3.03 $5.33 -39%
National City Corsair Capital $985m $5.00 $2.99 $4.73 -5.4%
(lead investor)

Kohlberg Kravis Roberts spinout Sageview Capital has invested $100 million (€63 million) in Everbank Financial to support the bank's aggressive expansion plans. The fresh capital will enable the Jacksonville, Florida-based bank to grow its assets by more than 30 percent to approximately $8 billion. Coming off record first-half earnings of $44.7 million, Everbank hopes to take advantage of recent market disruptions in the financial services sector by snatching up the assets that struggling competitors are eager to unload, such as loan portfolios. Under terms of the deal, Sageview will become Everbank's largest shareholder and its co-founder Scott Stuart will join the bank's board of directors.

The Jordan Company has agreed to acquire marine transport company Harvey Gulf International Marine for approximately $500 million (€315 million). The acquisition will be undertaken in partnership with two of the company's current owners and executives, Shane and Shawn Guidry. Harvey Gulf specialises in energy sector marine services, including towing drilling rigs and providing support for surveying, offshore and subsea construction and pipeline repair in the Gulf of Mexico. Jordan will own 76 percent of the company. In February, the firm closed its most recent buyout fund, The Resolute Fund II, on $3.6 billion, surpassing its previous fund, which drew $1.5 billion in capital commitments in 2002.

Greeting card giant American Greetings will sell cartoon properties Strawberry Shortcake and Care Bears to an OMERS Capital Partners- and Birch Hill Equity Partners-backed company for $195 million (€124 million). The entertainment division of The Cookie Jar Group, which was taken private in 2004, will also acquire the rights to Sushi Pack, a Saturday morning cartoon show produced by American Greetings and DIC Entertainment, which is a former Bain Capital portfolio company. DIC is also being acquired in the deal. Birch Hill, a mid-market Canadian firm, and OCP, a private equity unit within the Ontario Municipal Employees Retirement System, have been granted a 10-year exclusive inbound licensing agreement for all three properties.

Pierre Foods, a Madison Dearborn Partners portfolio company, has filed for voluntary Chapter 11 bankruptcy protection. Chicago-based Madison Dearborn purchased Pierre Foods in 2004 through the firm's $4 billion fourth fund, which closed in 2001. The deal included approximately $140 million (€89 million) in equity, according to a source familiar with the transaction, who noted the investment accounted for only a small portion of the fund. The pre-cooked and ready-to-cook food products manufacturer cited the increased price of raw materials and deteriorating market conditions for the processed food industry as the reasons for failing to meet its financial burden. Oaktree Capital Management, which recently closed the largest-ever distressed debt fund on $10.9 billion, has agreed to provide Pierre Foods with $35 million of debtor-in-possession financing.

A $6.1 billion (€3.9 billion) deal for US casino and racetrack operator Penn National Gaming by private equity firms Fortress Investment Group and Centerbridge Partners has collapsed. The two firms had agreed to buy the gaming company, which owns 19 casinos and racetracks across the US, last July for $67 a share. Penn will receive $225 million in cash to terminate the takeover and $1.25 billion in preferred equity, due to be paid in 2015, it said in a statement. The collapse of the credit markets, a slowing of the US economy and delays in acquiring the necessary regulatory approvals in the 15 states where Penn operates resulted in the need to scrap the deal.

Entertainment and dining franchise Dave & Buster's will once again be publicly listed, just two years after it was taken private by mid-market specialist Wellspring Capital Management. The hybrid pub and arcade operator, which owns 49 restaurants throughout the US and Canada, will seek up to $170 million (€110 million) in fresh capital on NASDAQ, according to documents filed with the US Securities and Exchange Commission. Dallas-based Dave & Buster's will use the offering's net proceeds to repay roughly $75 million in debt, as well as related premiums, interest and expenses. Wellspring will retain a controlling interest in the company, although the exact equity amount the New York-based private equity firm will own was not detailed.