Private Equity

Buyout shops and hired bosses gird for tug-of-war

12 May 2020

Many executives of private equity-owned companies are watching their future equity payouts dwindle as growth rates and valuations tumble. They have become more demanding over the years, but are typically the first to lose out when returns fall. Fraught negotiations lie ahead.

PNC picks Covid moment to cash in BlackRock chips

12 May 2020

The regional bank is selling its 22% stake in the asset manager, worth $17 bln. PNC has had a great ride, but new rules could have become a headache for both companies. The timing means boss Bill Demchak will have a big war chest to go looking for bargain acquisitions.

Fed jump-start leaves CLO buyout motor sputtering

11 May 2020

The vehicles that buy most leveraged loans are suffering as downgrades saddle them with too much ropey debt. The Federal Reserve’s lending facilities will help – but not enough to gin up much appetite for new loans. Private equity dealmaking could be stuck in the slow lane.

Luckin pileup crashes into China’s car lot

8 May 2020

The coffee chain scandal hit shares in Car Inc, a rental firm chaired by Luckin founder Lu Zhengyao. Lu also leads Ucar, whose banks could dump a slug of Car Inc pledged as collateral, triggering a change of control and dragging in Warburg Pincus. It’s a lesson in key-man risk.

Thyssenkrupp lift deal becomes $18 bln albatross

7 May 2020

Advent and Cinven paid up for the German group’s elevator unit because it looked virus-proof. Sadly for the buyout barons, a possible 10% revenue drop this year means it may be anything but. The duo could be stuck with a low-return asset, a level below private equity’s top floor.

Cards played well in three-handed casino deal

29 Apr 2020

Blackstone is buying 10% of Australia’s Crown Resorts from Lawrence Ho’s Melco. The buyout shop antes up at a discount while the Macau operator sensibly folds a busted bet. And amid a crisis, Crown gets staked by a shrewd backer. It may take time, though, for the pot to grow.

Tom Barrack’s accounting fight ignores fine print

16 Apr 2020

Colony Capital’s CEO wants officials to loosen mark-to-market rules following ructions in a corner of the mortgage market. He has a point. Firms shouldn’t be forced to unload assets in fire sales. But the rules already give industry players wiggle room. They should use it.

Buyout barons deserve state help too – at a price

15 Apr 2020

Smaller private equity-owned firms, and those with heavy debt loads, are shut out of some U.S. and UK aid programmes. For the sake of their workers, that should change. But only if Blackstone, KKR and others submit to no layoffs or payouts through the term of government loans.

Corona Capital: American football fail

14 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: The NFL has better finances and sturdier supporters than the XFL, which just filed for bankruptcy right after its reboot. But the Super Bowl operator’s future also rests on coronavirus-induced physical distancing.

Blackstone has remedy for drug R&D cash burn

13 Apr 2020

The private-equity firm is sinking $2 bln into Alnylam, including buying rights to future revenue from a drug still under regulatory review. It's a way to match Blackstone's bulging wallet with the biotech’s hefty costs while limiting exposure to volatile equity markets.

Silver Lake bets virus won’t overstay

7 Apr 2020

The private equity firm is part of a group investing $1 bln in home-share app Airbnb. It also aims to raise $16 bln of fresh cash for tech investments. It’s bold timing, but depressed markets offer bargains. The question is how Covid-19 will change behavior, including in travel.

EQT finds LBO immunity formula for virus era

7 Apr 2020

Air Liquide is in talks to sell its disinfectant unit to the Swedish private equity firm for around 900 mln euros. Even with rising medical demand, the purchase looks brave given its rich valuation. Still, the risk of future epidemics could see the buyout group double its money.

Buyout barons may trip up during their big moment

2 Apr 2020

The market crash has created opportunities for private equity bosses, who are sitting on $832 billion of dry powder. But debt, crucial for the model, looks harder to come by. And with institutional investors under pressure, funds may not be able to tap all the cash they need.

Corona Capital: GE, Oaktree, M&A back doors

1 Apr 2020

Concise views on the pandemic’s corporate and financial fallout. GE delivers its own form of cash injection, hedge fund boss Howard Marks praises heavy-handed Covid-19 responses, and a car-parts maker flirts with bailing on a deal.

Shadow lenders may get their day in the sun

31 Mar 2020

Private debt providers have more than doubled their assets since 2010 to over $800 bln. They also have over $270 bln in dry powder. Newer lenders may struggle as defaults mount. But this will create even more bargains for the winners. The Covid-19 crisis is their moment to shine.

Private equity healthcare bets go from ill to ICU

30 Mar 2020

KKR and Blackstone gambled big on rising medical expenditures, buying emergency room staffing firms Envision and TeamHealth. Wars with insurers over aggressive billing practices left both companies weak. Cancelled procedures from Covid-19 will put both in critical condition.

Tortuous Japanese hotel deal takes viral twist

20 Mar 2020

Unizo is backing a sweetened $1.9 bln bid from Lone Star that matches Blackstone’s price. Top owner Elliott is ready to accept, eight months into the bidding war. Fresh Covid-19 volatility may accelerate an endgame, but also calls into question the frontrunner’s takeover plan.

KKR spots brass in British muck

19 Mar 2020

The private equity group’s infrastructure arm is buying water company Pennon’s trash management unit for 4.2 bln pounds. The valuation looks rich, given recent market moves. But lengthy contracts and growth in recycling mean co-CEO Henry Kravis needn’t fear a grubby return.

Carlyle’s SBI Cards IPO is priced to perfection

16 Mar 2020

Shares of State Bank of India’s credit card unit fell slightly on their debut. In choppy markets, it’s a decent result for the U.S. buyout group pocketing most of the $1.4 bln in proceeds. As virus fears curb Indian spending though, the rich valuation suddenly feels over the top.

Blackstone unearths rough Chinese property gem

10 Mar 2020

The private equity firm is in talks to buy Soho China for $6.3 bln. A 101% premium is eye-catching, but the collection of skyscrapers – some designed by Zaha Hadid – look cheap. After Blackstone’s lucrative run selling to mainland buyers, this deal’s timing warrants attention.