CalPERS gets what it pays for from private equity

November 24, 2015

The U.S. pension giant revealed that $24.2 bln of net gains from the asset class over 25 years came at the cost of $3.4 bln in so-called carried interest for fund managers. Private equity is pricey and hitherto opaque, but CalPERS’ analysis so far helps justify the fees.

Cerberus finds workaround for Northern Rock mess

November 13, 2015

The private equity firm is paying a premium for 13 bln stg of assets from the collapsed UK lender. It helps the state’s finances, but leaves Cerberus to fund a big portfolio itself. Selling a 3 bln stg chunk to TSB, and better securitisation markets, suggest a way to do so.

TPG reaches for some vintage Goldman fairy dust

October 29, 2015

The buyout shop hired the bank’s former president, Jon Winkelried, to be co-CEO. That suggests no one internal was better suited than a man who rode off mid-financial crisis for a cowboy’s life. The Goldman imprimatur may help with, say, an IPO but it doesn’t always stick.

Follow KKR’s new buyback plan to its logical end

October 28, 2015

Henry Kravis wants to lift his buyout shop’s valuation by paying a fixed dividend, repurchasing units and devoting more to its investment strategy. If it can’t alter public perceptions and the stock is consistently “cheap,” KKR could do what it does best: take the firm private.

Collapsed Ares deal leaves friends with benefits

October 27, 2015

Tony Ressler’s buyout shop called off its $2.6 bln merger with Kayne Anderson after disagreements over investing in energy. Even so, Ares is giving Kayne $150 mln to play with. It’s a cozy solution between cronies that contrasts starkly with how some crisis-era LBOs ended.

Keep one eye on Sam Zell’s “For Sale” sign

October 26, 2015

The U.S. real estate mogul’s Equity Residential is offloading a collection of apartments for $5.4 bln. While Zell got the timing right as a seller in 2007, so did buyer Barry Sternlicht’s Starwood in 2009. The one big difference is Zell’s two extra decades of investing experience.

Dell’s tracking stock 2.0 boasts fixes, new bugs

October 20, 2015

The tech crash of 2000 exposed governance gaps and other risks of synthetic shares pegged to certain assets. The PC maker has patched some flaws in proposing to issue shadow VMware stock in its $60 bln-plus deal for EMC. But investors still might not relish the user experience.

The Devil’s Dictionary of Post-Crisis Finance

By Edward Chancellor
October 16, 2015

Ambrose Bierce wrote “The Devil’s Dictionary” a century ago, ranging acerbically across government, commerce and life. Breakingviews’ original re-use of the form for finance – in 2007, when the crisis was barely beginning – is no longer adequate. Herewith part two of the sequel.

Clogged IPO exit ramp boxes in buyout barons

October 15, 2015

Blackstone and peers have had a good run taking heavily indebted companies public again. Offerings for Albertsons and Neiman Marcus have been delayed. First Data struggled. Petco and Univision may, too. It bodes poorly for private equity when selling becomes as tough as buying.

EMC investors get $67 bln ticket out of trouble

October 12, 2015

Michael Dell and others are paying $33 a share for the tech conglomerate. Sure, most of the notional 38 pct premium comes as a flaky tracking stock in EMC sub VMware. But there are no other obvious bidders and breaking up the company is a risky alternative for only slight gains.