Carlyle’s big payday does private equity no favors
By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Carlyle Group isn’t doing its industry any favors. As part of the private equity firm’s initial public offering process, this week it revealed the lucre reaped by its three founders last year. David Rubenstein, William Conway and Daniel D’Aniello took home a combined $400 million in cash payouts. That’s on top of their nearly $4 million salaries and the profits on $200 million of distributions on personal investments in the firm’s funds. Carlyle’s timing is impeccable.
Ferretti’s yachts find fitting berth in China
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own
Few companies embody the highs and lows of turbo-charged modern finance better than Ferretti. Once the luxury yachtmaker made a mint for private equity. Now a state-backed Chinese industrial conglomerate is buying it for at most a fifth of its peak value.
Ferreti’s yachts tells s atory of reality in the business world. Like a wheel, sometimes you are on top, at the peak; and sometimes you’re down. However, Ferreti’s yachts prove themselves when even in downfall, they try to stand back on top again in the hands of the Chinese. Impressive!
Nichelle from baignoire douche
Predictions 2012: Upside down and inside out
By Robert Cole
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Planet finance has a propensity to turn itself upside down and inside out. It’s up to its old tricks again. A new collection of commentaries from Breakingviews sets the financial agenda for the next 12 months.
Double-dipping Twinkies tarnish bankruptcy process
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Wednesday marked a day of mourning for American junk food aficionados – and not for the first time. Hostess Brands, maker of the cream-filled bright yellow Twinkie snack, filed for Chapter 11 bankruptcy just three years after emerging from the court’s protection. That’s not just a kick in the gullet for Ripplewood Holdings, the private equity owner that sank $40 million into the baker last year. The company’s failure leaves a greasy stain on the American bankruptcy process itself.
Chapter 11 is for creditors. It’s intended to be used when continuing the company will return more to existing creditors than an immediate liquidation (think 20 cents on the dollar instead of 5 cents on the dollar). It is not supposed to ensure the long-term viability of a company. It merely gives creditors a chance to come together a say, “after discounting the 20 cents/dollar forecasted return by the risk that the reorganized company will fail again, the expected return is still higher than the liquidation value of the company, so keep the company in business.”
Private equity skewered by Romney-bound arrows
By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Private equity is caught in the crossfire. Rivals for the Republican nomination for the U.S. presidency are leading a full-blown assault on front-runner Mitt Romney’s track record at Bain Capital. The attacks won’t stop Romney, but the collateral damage could hurt the buyout industry.
LBO debt gluttons have now gorged on equity too
By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Leveraged buyout kings renowned for their debt gluttony have now gorged on equity, too. They’re sitting on nearly $400 billion of cash committed by investors, according to Preqin, or more than $1 trillion of purchasing power. A big slug of it belongs to mega-buyout funds that are already at or approaching their use-by date.
Loan hangover will cast pall over European buyouts
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Once again, banks in Europe have been left standing when the music stopped. In an echo of 2008, lenders backing private equity deals have found themselves with a big backlog of unsold loans. That bodes ill for future buyouts.
Capitalism takes three big hits in one day
By Edward Hadas
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
It may just be an unhappy coincidence. Still, there was a common theme to three pieces of bad news from different parts of the financial world on Tuesday. Monuments of financial folly are falling apart and the debris is hazardous.
World finance run amuck. Too many big shot geniuses using complex mathematical strategies to get rich quick with little in the way of international regulation.
Apax misses with HIT disposal
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Mattel’s $680 million purchase of HIT Entertainment, the company behind kids’ characters Bob the Builder and Thomas the Tank Engine, brings a sorry tale of private equity ownership to a close. But uniting Bob with Barbie does not necessarily mean they’ll live happily ever after.
U.S. government has chance to borrow very long
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Orson Welles once hawked Californian wine using the tagline: “Paul Masson will sell no wine before its time.” The same could be said about the U.S. Treasury and 50 or 100-year bonds. Maybe it’s finally the right moment to actually sell some.
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