DealZone

Obama Campaign Attacks Romney’s PE Resume

romney.jpegPE Hub’s Dan Primack writes:

Mitt Romney is probably just days away from being named John McCain’s running mate, and the Democrats are already taking shots based on his time running Bain Capital. During a press conference earlier today in Denver, Obama campaign manager David Plouffe referred to the former buyout kingpin as a “job killing machine in business” who “has been proficient at using tax havens in places like the Cayman Islands that Americans have become increasingly tired of.”

It’s certainly true that Bain laid off portfolio company employees during Romney’s tenue. It’s also certainly true that Bain hired portfolio company employees during Romney’s tenue (particularly at the earlier-stage companies).

So Plouffe was only telling a half-truth, although it’s one we should expect to hear over and over again. This will be particularly true if Romney’s people keep avoiding any actual discussion of Bain Capital, as his spokesman did in response to Plouffe’s comments.

As I’ve written before, I’m thrilled by the prospect of Romney as a vice presidential candidate. Not because of my political biases, but because it gives me something to write about for the next few months. But his former private equity colleagues should be very nervous about what his candidacy would mean for their own reputations and future regulation. The industry was dragged through the mud most of last year, and has largely been forgotten ever since (except in Michigan, thanks to Cerberus/Chrysler). A McCain-Romney ticket will bring it all back with a vengeance.

Private equity and the Russia-Georgia conflict

PE Hub’s Dan Primack has an interview with Michael Bleyzer, CEO of Ukraine-based private equity firm SigmaBleyzer, on the impact of the Russia-Georgia conflict and investing in the former Soviet Union.

Dan: Is there much of a private equity market in Georgia?

bleyzer.jpgMichael: I’m not aware of anyone activity investing there, although that doesn’t mean there is nobody. It’s a very small market with just a few real sectors for private equity. There’s some energy with hydroelectric you could do, and maybe something in food.

I went there before Saakashvilli became president, and met with the previous one. I liked the country but just couldn’t find things to do there. My general thought was that small markets on their own are difficult, and this was one with political worries as well.

Clear Channel closes — finally

drumroll.jpgDrumroll, please: Almost two years after radio station and billboard company Clear Channel Communications began exploring strategic options, its $17.9 billion takeover finally closed on Wednesday.

The deal, slowed by legal battles in two states and negotiations to lower the purchase price, became a symbol of the buyout industry’s glory days and the subsequent struggles of the credit crunch.

Clear Channel had agreed to be acquired by private equity firms Thomas H. Lee Partners and Bain Capital Partners last year. The market quickly changed and credit to fund the acquisition became more costly and difficult to secure.

Gloom and some doom seen for hedge funds, private equity

Not a lot of sunshine and rainbows this week at the Reuters Hedge Fund and Private Equity Summit, being held in Hong Kong, London and New York. Here’s a sampling:

    david-bailin.jpgThere will be more hedge fund collapses this year as many managers struggle to borrow the new money they need to trade with and face investors disappointed by recent losses, said David Bailin, who heads Bank of America’s alternative investment group, which has already fired roughly 15 percent of the hedge fund managers it uses. He predicted rough trading for specialized fixed income funds, and said that BoA execs are “not big funds of quant funds … People are willing to trust black boxes only when they work.”
    eugene-kim.jpgSmaller Asian hedge funds are in for a painful round of consolidation, according to Eugene Kim, chief investment officer of $250 million hedge fund manager Tribridge Investment Partners. “Investors are demanding more of managers in regards to operational infrastructure, compliance, risk management … you have to have a critical mass of assets under management to be able to pay for all of that,” he said. “A lot of marginal managers who have not been able to make it to the next level in terms of fundraising, in terms of size, are either going to have to merge or get bought out or shut down.”
    joshua-steiner.jpgPrivate equity deals will remain small in size and volume for some time compared to their 2007 peaks, as a logjam of debt prevents banks from adding more to their portfolios, Quadrangle managing principal Joshua Steiner told Reuters reporters and editors. The $34.1 billion takeover of BCE — still yet to close — may prove to be the high water mark for the foreseeable future, he said: “Deals of that size will take a long time to come back, if ever.”

Click here for full coverage of the summit. 

Reuters hedge fund and private equity summit

bubble.jpgHedge funds are ready to set records this year, but not necessarily the good kind.

“The bubble has popped and there is going to be a lot of pain,” said Bradley Alford, the founder of hedge fund advisory firm Alpha Capital Management. “There will be a massive reassessment of where money should go.”

Many investors expect the $1.8 trillion industry’s estimated 10,000 funds to be winnowed down by a few thousand in a few years. Funds that oversaw nearly $4 billion in assets have already closed their doors in the first quarter of 2008.