Carlyle offers bleak near-term PE outlook

February 4, 2009

Carlyle Group co-founder David Rubenstein said the year ahead would be difficult but that successful deals could have high returns and banks may lend more in the latter half of 2009.
Painting a bleak, near-term view, Rubenstein, who was speaking at the SuperReturn private equity conference in Berlin, said the major focus this year would be the dialogue between limited partners (LPs) — the investors in private equity funds — and the private equity executives, known as general partners.
“Going forward, the LPs will be heard much more and their concerns on deal fees, size of funds… will have to addressed,” he said. “The pendulum will have swung… for the next few years, they have the balance of power.”
He said private equity firms would find fundraising hard and predicted that “very few new firms will be able to raise money at all”. Relatively few buyouts will be completed this year, he said, and he didn’t expect to see many exits from deals already completed in the first six months of the year. He added that a lot of deals done in the last couple of years would not survive. 

Other deal news:
** Coca-Cola Amatil Ltd’s major shareholder, The Coca-Cola Co (TCCC), was still in talks on a A$7.3 billion ($4.7 billion) bid proposal for the Australian soft drinks firm from brewer Lion Nathan Ltd, Amatil said.
 ** Nisshin Steel Co, Japan’s fifth-biggest steelmaker, said it had raised its stake in Spain’s Acerinox SA, the world’s biggest stainless steel maker, to 15 percent from 11.3 percent, spending 12.97 billion yen ($145 million). 
** AT&T Inc is among the bidders for Verizon Wireless’ roughly $3 billion in wireless assets the latter must divest as part of its purchase of Alltel Corp, the Wall Street Journal said, citing people familiar with the matter. 
** China Investment Corp (CIC), a $200 billion sovereign wealth fund, is in talks to buy up to half of CITIC Capital Holdings Ltd, an investment firm described by local media as ‘China’s Blackstone’, two sources close to the situation said.
** Australian investment bank Macquarie Group Ltd, backed by a healthy balance sheet, has agreed to buy one of the largest natural gas trading operations in north America from Constellation Energy.
** Spain’s leading savings bank La Caixa bought nearly 2 million shares in Portugal’s third-largest listed bank BPI between Jan. 26 and 30 and now holds a 29.92 percent stake.
** Churchill Mining PLC said that three companies are carrying out due diligence regarding investing or entering into a joint venture in the East Kutai coal project in Indonesia. 
** Skincare specialist Sinclair Pharma Plc said it took full control of privately held Laboratorios Novo Pharma SL in Spain by acquiring the 49.95 percent stake it did not already own for 330,000 euros ($427,000).
** Gateway Distriparks Ltd said it has acquired the remaining 26 percent stake in its Visakhapatanam unit for 46.8 million rupees, making the unit its wholly-owned subsidiary.
** The board of Russian carmaker AvtoVAZ, in which Renault owns a 25 percent stake, has approved the sale of 75 percent of its Lada brand service dealership, an AvtoVAZ board member said.

One comment so far | RSS Comments RSS

How does one do due diligence in an Indonesian coal project? Hello… people couldn’t catch Madoff how can they catch corruption in Indonesia. Thinking about this subject a lot. Good book I recommend “Hedge Fund Operational Due Diligence Understanding the Risks” by Jason Scharfman…. keeping me thinking. Is hedge fund due diligence techniques applicable to M&A type work? Maybe it should be. I don’t know but I’d love to see the Indonesia report on Churchill.

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