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☆ One of Trump’s Treasury contenders hails from the most cutthroat private equity firm on Wall Street
▼ + stars: | 2024-11-22 | by ( Allison Morrow | ) edition.cnn.com time to read: +7 min

The words “private equity” are almost poetic in their power to obfuscate in such a way that most people simply tune out when they hear them. But there’s a reason workers tend to have a negative association with private equity. Per Bloomberg, Apollo “built its name as the scrappiest private equity and distressed-debt investor on Wall Street by buying businesses and loading them up with debt that offered creditors meager protections in the face of default.”Historically, private equity deals were largely handled by big banks. Private equity firms now hold controlling stakes across an array of industries, including supermarkets, housing, health care, fashion, restaurants and vet clinics. And other efforts to force more transparency and accountability in private equity have similarly faced opposition.

Persons: CNN Business ’, Marc Rowan, Donald Trump’s, Rowan, Bill Lazonick, he’s, ”, Megan Greenwell, aren’t, ” Dennis Kelleher, Apollo “, it’s, Sen, Elizabeth Warren of, hadn’t, Scott Bessent, Kevin Warsh, “, ” Greenwell Organizations: CNN Business, New York CNN, Apollo Global Management, Treasury, OCC, Republicans, Industry Research Network, — Bloomberg, KKR, Blackstone, Carlyle Group, Securities and Exchange Commission, “, Research, Treasury Department, Bloomberg, Financial Times, Federal Reserve Locations: New York, ”, Elizabeth Warren of Massachusetts

☆ Sainsbury’s gain is private equity’s pain
▼ + stars: | 2023-11-02 | by ( ) www.reuters.com time to read: +2 min

LONDON, Nov 2 (Reuters Breakingviews) - Red hot competition in the UK grocery market is favoring the largest players. Sainsbury’s CEO Simon Roberts reckons the 6.5 billion pound group has been taking market share from rivals including discounters Aldi and Lidl. That may not be good news for Sainsbury’s smaller peers like Morrisons and Asda, owned by Clayton, Dubilier & Rice and EG Group respectively. Both Sainsbury’s and Tesco have held their market shares relatively stable since 2021, when CD&R bought Wm Morrison. Sainsbury’s is currently valued at 5 times forward EBITDA, according to LSEG data.

Persons: J Sainsbury’s, Simon Roberts reckons, Wm Morrison, Aimee Donnellan, Aston Martin, Neil Unmack, Streisand Neto Organizations: Reuters, Aldi, Tesco, Clayton, Rice, EG, R, Asda, Morrisons, Pfizer, Thomson Locations: Britain’s, Asda, Dubilier

☆ Upstart steals march on Atos’s M&A battle
▼ + stars: | 2023-11-02 | by ( ) www.reuters.com time to read: +2 min

REUTERS/Sarah Meyssonnier Acquire Licensing RightsLONDON, Nov 2 (Reuters Breakingviews) - Atos (ATOS.PA) may have found a helper, and potential acquirer. Smaller rival Onepoint said on Wednesday that it had bought a 9.9% stake in the ailing French IT company. Mustier is trying to implement a plan devised before he took over, which will see Atos split into two entities. Its 10% stake will have cost no more than 70 million euros. If a 900 million euro rights issue included in the split plan is confirmed, the total outlay for the stake will be about 160 million euros.

Persons: Atos, Sarah Meyssonnier, Onepoint, Jean, Pierre Mustier, Daniel Kretinsky, Mustier, Pierre Briançon, Aston Martin, Neil Unmack, Oliver Taslic Organizations: REUTERS, Reuters, French IT, Airbus, Pfizer, Thomson Locations: Paris, France, French, Czech, Orange, cybersecurity

In 1980, there were 24 private equity firms, according to Prequin, which tracks alternative assets; by 2022, there were around 5,000 private equity firms controlling some 18,000 companies. Among the industries where private equity sank deep roots was health care. Thin margins have forced many nursing homes to shrink their nursing staff, leaving them ill prepared when the pandemic hit. One New Jersey analysis found that facilities owned by private equity had a higher rate of Covid-19 deaths and cases than nursing homes not owned by private equity. Fewer than 20 percent of all nursing homes meet a recently proposed minimum staffing level, according to a Kaiser Family Foundation estimate.

Persons: equity’s, Sabrina T, Howell, Mark Parkinson, Ms, ” Organizations: Healthcare Private Equity Association, New York University, Genesis Healthcare, Formation Capital, Kaiser Family, American Health Care Association Locations: Jersey, New Hampshire

☆ Apollo’s divergent path outshines Blackstone
▼ + stars: | 2023-09-28 | by ( Jonathan Guilford | ) www.reuters.com time to read: +7 min

NEW YORK, Sept 28 (Reuters Breakingviews) - Apollo Global Management (APO.N) and Blackstone (BX.N) both emerged from private equity’s primordial swamp. That spread comprised nearly three-quarters of Apollo’s $3.1 billion in profit available to be doled out to shareholders in 2022. That turbo-charged the fees Blackstone reaps from managing funds, which contributed 59% of $6.6 billion in profit available to shareholders last year. Apollo’s earnings from its insurance business are awarded an even more meager 10 times. This doesn’t form the closed loop like that between Athene, Apollo and its various specialist lenders.

Persons: Marc Rowan, haven’t, dealmaking, Rowan, Blackstone, Steve Schwarzman, Athene, BREIT, Rich, reckons Bain, Schwarzman, Dealmaking, hasn’t, Lauren Silva Laughlin, Oliver Taslic Organizations: Reuters, Apollo Global Management, Blackstone, Apollo, Reuters Graphics Reuters, Barclays, Schwarzman, U.S . Federal, Industry, Life Insurance, Research Association, Thomson Locations: freefall, BREIT, Blackstone

☆ Republicans Lead Race for Private Equity’s 2024 Dollars
▼ + stars: | 2023-09-21 | by ( Chris Cumming | ) www.wsj.com time to read: 1 min

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Organizations: Wall Street

☆ Private equity bites off mostly what it can chew
▼ + stars: | 2023-08-17 | by ( Jonathan Guilford | ) www.reuters.com time to read: +4 min

Private equity firms notched nearly $300 billion of acquisitions worldwide through Aug. 15, according to Dealogic data. Deals in the $1 billion to $5 billion range are running closest to the same pace as 2022. STG, for example, secured a loan to value of more than 40% from private lenders. With capital tighter, it’s easy to understand why buyout firms are pursuing humbler deals more likely to exceed the minimum returns investors expect. GTCR’s plan to buy 55% of Worldpay at a $17.5 billion valuation requires an equity check equivalent to 15% of the buyout firm’s assets.

Persons: Simon & Schuster, STG, Clayton, Rice, Banks, Ares Capital’s, hasn’t, Jeffrey Goldfarb, Sharon Lam Organizations: KKR, New York Stock Exchange, Reuters, Avid Technology, GTCR, TPG, Francisco Partners, Bain Consulting, Thomson, & $ Locations: New York, U.S, can’t, Dubilier

☆ Efforts to Spotlight Private Equity’s Healthcare Stakes Struggle for Traction
▼ + stars: | 2023-08-06 | by ( Chris Cumming | ) www.wsj.com time to read: 1 min

Organizations: Wall Street

☆ Blackstone Wins Private Equity’s Race to $1 Trillion
▼ + stars: | 2023-07-21 | by ( Miriam Gottfried | ) www.wsj.com time to read: 1 min

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Persons: Dow Jones

☆ Going Bankrupt in the Name of Efficiency
▼ + stars: | 2023-06-21 | by ( Jennifer Szalai | ) www.nytimes.com time to read: +3 min

People in favor of private equity will say that the firms serve a crucial function, making troubled businesses more robust and efficient. “Roughly one in five large companies acquired through leveraged buyouts go bankrupt in a decade,” he writes. By 2017, after years of layoffs, crushing debt and being charged regular management fees by the private equity firms “for the privilege to be owned by them,” Ballou writes, Toys “R” Us was bankrupt. Private equity firms have acquired nursing homes, provided staffing for hospitals and services for prisons. And, of course, the cost-cutting measures typically imposed on acquired companies often include slashed wages and abandoned pension obligations.

Persons: Ballou, ”, ” Ballou, Morgenson, Rosner, David Rubenstein, HCR, we’re, ” Rubenstein Organizations: KKR, Bain, Vornado Realty Trust, Carlyle Group, ” Industries

☆ Private equity risks gorging on its secret sauce
▼ + stars: | 2023-06-14 | by ( Liam Proud | ) www.reuters.com time to read: +7 min

Investors prefer pedestrian but steady management fees over the lumpy share of fund profit that is the industry’s special sauce. Private equity firms with a public listing funnel some of the carry to employees and some to shareholders. TPG (TPG.O) last year went public with a similar strategy of paying around two-thirds of performance-related revenue to employees. Assuming the general idea is to keep overall earnings steady, then higher fee-based income for shareholders must be matched by lower cash compensation for employees. It suggests that for KKR, TPG and the rest, there is a limit to just how much of their own secret sauce employees can eat.

Persons: Steve Schwarzman, Carlyle, Blackstone’s, Schwarzman, Henry Kravis, George Roberts, EQT, Blackstone, Harvey Schwartz, Rowe Price, Thoma Bravo, Jeffrey Goldfarb, Sharon Lam, Oliver Taslic Organizations: Reuters, Blackstone, KKR, Apollo Global Management, JPMorgan, Reuters Graphics, TPG, Apollo, Reuters Graphics Reuters, Alpha, Bain Capital, Thoma, Ares Management, Thomson Locations: BlackRock

☆ Private equity hurtles towards hard Asia reset
▼ + stars: | 2023-06-07 | by ( Una Galani | ) www.reuters.com time to read: +4 min

SINGAPORE, June 7 (Reuters Breakingviews) - Sequoia’s decision to carve out its China business formalises a push for a hard reset in Asia that private equity firms have until now largely been grappling with behind the scenes. These country-agnostic funds accounted for just over half the money raised in 2022 in the region, a 22-year high. Granted, these South and Southeast Asia markets are small at present compared to China; that’s why more firms are seeking bigger-ticket buyouts in Australia and Japan. That will eventually weigh on performance in the region, which for top-quartile Asia funds last year was a very respectable median 25% net internal rate of return, per Preqin. Private equity’s cooling relationship with China, though, is likely to hit hard for most.

Persons: Neil Shen, Shailendra Singh, Singh, Zhang Lei, There’s, Shen, Antony Currie, Katrina Hamlin Organizations: Reuters, Bain & Co, Bain Capital, KKR, XV Partners, Sequoia, Twitter, NEWS Venture, Sequoia Capital, Thomson Locations: SINGAPORE, China, Asia, Republic, Sequoia, India, Southeast Asia, Greater China, Malaysia, Philippines, Indonesia, Thailand, Hillhouse, Singapore, Australia, Japan, U.S

☆ Private equity is being squeezed from all sides
▼ + stars: | 2023-05-12 | by ( Edward Chancellor | ) www.reuters.com time to read: +8 min

But this time around there’s a lot more private equity money chasing a limited number of opportunities. So private equity funds could face the prospect of a prolonged period of higher borrowing costs, lower valuations, and depressed investment returns. The birth of private equity coincided with the Reagan administration’s policy of relaxing regulations and tax cuts. Recent high profile corporate bankruptcies owned by private equity include car-rental firm Hertz and retailer Toys R Us. The private equity industry could soon find itself caught in a pincer, between tighter financing on the one hand and tighter regulation on the other.

☆ UK growth hinges on more than a new pension giant
▼ + stars: | 2023-04-19 | by ( Francesco Guerrera | ) www.reuters.com time to read: +7 min

Politicians and financiers think a consolidation of the country’s pension funds would breathe new life into its stocks, startups and infrastructure. Meanwhile, there is no doubt that UK defined-benefit pension funds, company-sponsored plans that promise a specific payment upon retirement, have moved away from UK equities. The proposals also entail creating a 100 billion pound pension fund, modelled on the Canada Pension Plan Investment Board, a retirement giant with $536 billion assets under management. Overall, some 19% of these funds’ assets are in UK stocks, according to the Pensions Policy Institute. If UK assets can yield the risk-adjusted returns offered by other assets, pension funds will join in too.

☆ Private Equity’s Food Binge Goes Sour
▼ + stars: | 2023-04-10 | by ( Matt Wirz | ) www.wsj.com time to read: 1 min

Private-equity funds went on a buying binge for food companies before markets crashed in 2022. Now they have indigestion that is contributing to rising prices at the grocery checkout. The funds snapped up a record 786 makers of food and beverages worth $32 billion in 2021, using bundles of debt to pay for their purchases, according to data from S&P Global Market Intelligence. The financiers projected that staple goods would keep making profits no matter how the economy fared. But that forecast changed, with the food industry soon hammered by higher labor costs, supply-chain disruptions and surging inflation.

☆ Private-Equity Activity Could Rebound in Second Half of Year, Report Says
▼ + stars: | 2023-02-27 | by ( Chris Cumming | ) www.wsj.com time to read: 1 min

Private equity’s recent challenges in fundraising, deal making and exits don’t dim the long-term outlook for the asset class, a new report from Bain & Co. says. While interest rates have risen and many investors are worried about the future, a long-expected recession hasn’t arrived, and many private-equity deal makers are ready to get back to work, said Hugh MacArthur, chairman of private equity for the Boston-based consulting firm. “Fundamentally, nothing is broken in the global economy,” he said.

☆ Carlyle's new boss will be virtuoso second fiddle
▼ + stars: | 2023-02-06 | by ( Jonathan Guilford | ) www.reuters.com time to read: +3 min

That’s the best way of interpreting the private equity firm’s appointment of former Goldman Sachs (GS.N) banker Harvey Schwartz on Monday. He never quite made it to the CEO job at Goldman, though served in a number of high-level roles like chief financial officer and chief operating officer. They felt that the ousted Lee, who pushed hard to diversify Carlyle’s business, hadn’t adequately consulted them on big moves, according to Reuters. The firm’s co-founder Bill Conway, also one of Carlyle’s two co-chairmen, has been filling the role on an interim basis. Schwartz previously held various senior roles including chief financial officer and chief operating officer at investment bank Goldman Sachs, which he left in 2018.

☆ Toshiba buyout heralds a big step back for Japan
▼ + stars: | 2023-01-20 | by ( Una Galani | ) www.reuters.com time to read: +7 min

MUMBAI, Jan 20 (Reuters Breakingviews) - The end of a long battle to wring some value from Toshiba (6502.T) is finally within reach. Such an outcome won’t encourage private equity firms, and big policy shifts underway may stifle the industry just as it hits a new high. Instead, after an accounting scandal in 2015, Toshiba came to epitomise Japan Inc’s pervasive value destruction. Japan typically outperforms private equity deals in other developed markets, partly because existing incentive structures for company bosses are so poor. The country’s private equity industry is only just finding its feet.

☆ Buyout barons will court the panicking masses
▼ + stars: | 2022-12-20 | by ( Jonathan Guilford | ) www.reuters.com time to read: +3 min

Since they’ve already scoured traditional funding sources like pension funds and insurers, they’ll make a priority of tapping wealthy individuals in 2023. Even those slower to embrace the trend, like Carlyle (CG.O), are getting about 10% of inflows from individuals. Pension plans and other stalwarts have seen their stocks and bonds slump in value, potentially leaving them overexposed to buyout funds, private credit, real estate and infrastructure. These investors don’t always have the resources or stomach to lock up their money for half a decade or longer. Third-party platforms like Moonfare are proliferating, pooling retail capital into vehicles that buy stakes in buyout funds.

loadingIn a follow-up tweet, FTX said subsidiaries LedgerX LLC, FTX Digital Markets, FTX Australia Pte Ltd, FTX Capital Markets, Embed Financial Technologies and Embed Clearing were not included in the Chapter 11 filings. People familiar with the matter told Reuters at least $1 billion of customer funds have vanished from FTX. The nine days of turmoil hit already-struggling cryptocurrency markets, sending bitcoin to two-year lows . Its CEO Brian Armstrong told CNBC crypto markets need regulation to avoid more washouts like FTX. This is the primary way financial markets could suffer, as it may have further minor implications for portfolio shocks in a volatile macro regime."

The firm's founder Sam Bankman-Fried had transferred $10 billion of customer funds to his trading company, Alameda Research, the sources said. Blockchain analytics firm Nansen said it saw $659 million in outflows from FTX International and FTX U.S. in the last 24 hours. In January, FTX had raised $400 million from investors at a $32 billion valuation. "Over four years, FTX raised $1.8 billion from venture capital and pension funds. In its bankruptcy petition, FTX Trading said it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors.

☆ The anesthesiologist who is putting you under may work for a private-equity firm
▼ + stars: | 2022-10-10 | by ( Gretchen Morgenson | Gretchen Morgenson Is The Senior Financial Reporter For The Nbc News Investigative Unit. A Former Stockbroker | She Won The Pulitzer Prize In For Her | ) www.nbcnews.com time to read: +12 min

But some physicians and patient advocates say the health care investments of private-equity firms and their drive to reap relatively short-term profits are inconsistent with putting patients first. Independent academic studies find that private equity’s laser focus on profits in health care operations can result in lower staffing levels at hospitals and nursing homes. Neither the FTC nor U.S. Anesthesia Partners responded to voice mails seeking comment; a spokesman for U.S. Anesthesia Partners confirmed the inquiry to the Journal, saying it is cooperating. NBC News asked both of NAPA’s private-equity owners about the disputes involving the company and the research showing higher costs associated with private-equity ownership of anesthesiology practices. Covid was sweeping the country and Moses Taylor was doing its best to respond to the health care crisis, according to its lawsuit.

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