Pets at Home is the latest addition to the pipeline of high-quality initial public offerings set to greet the Great British investing public, according to the FT:
It plans to raise £275m from the offering, which it will use to pay down debt. It will also use £325m from new banking facilities to cut debt. The group plans to have net borrowings of £275m when it comes to market.
Distressed debt investors are circling General Healthcare Group, the FT says, in expectation that the UK’s largest private hospital operator by revenue will be forced to restructure its heavily indebted financial set-up. The special situations arm of KKR is one of the funds that has bought some of the hospital company’s debts, the newspaper says, citing people familiar with the matter. KKR declined to comment. GHG operates 70 hospitals and treatment centres across the country and employs 15,000 people. But the company was straddled with £1.9bn of gross debt in the 2006 acquisition by Netcare, the South African healthcare group; Apax Partners, the private equity investor; and two property investors.
Private equity groups including TPG Capital and KKR may buy up minority stakes of up to 20 per cent in Yahoo, preparatory to a full acquisition of the company later on, Reuters reports. The new move follows non-disclosure deals with Yahoo and talks with its co-founders, who control almost 10 per cent. Other private equity firms have not signed the confidentiality agreements in order to avoid cramping their ability to enter into consortium deals with other outside bidders, including Alibaba Group of China.
Kohlberg Kravis Roberts is in exclusive talks to buy some or all of the Samson Investment Company, a family-owned oil and gas exploration company, NYT DealBook says. Citing a person briefed on the matter, the report says the private equity group has been studying a possible Samson transaction for some time and has been lining up financing with several banks, adding that talks could still fall apart. Such a deal would be one of the largest leveraged buyouts since the financial crisis of September of 2008.
Len Blavatnik, whose Access Industries group bought Warner Music earlier this year, has walked away from the $3bn-$4bn auction for EMI, the FT reports, citing people close to the negotiations. Mr Blavatnik’s offer of about $1.5bn for EMI’s recorded music division remained below the price at which Citigroup was prepared to sell the asset it seized in February from Terra Firma, these people said. However, they did not rule out Mr Blavatnik returning to the table, as he did after a similar threat three weeks ago, adding that it may not be clear for two weeks or more whether Citigroup will settle for offers below initial hopes or retain EMI for at least another year. These people also said Citigroup’s negotiations over EMI Music Publishing appeared to have made more progress, with an offer of about $2bn from BMG, the joint venture between Bertelsmann and KKR, beating a bid from a Sony-led group which was still working to secure financing from sovereign wealth funds and elsewhere.
Kohlberg Kravis Roberts is set to expand into Hong Kong in an early bet by the private equity group on a slowdown in the Chinese economy, the FT reports. KKR will send in its $2bn special situations unit in the next six to nine months, in order to spot opportunities in distressed and indebted Chinese companies. “There will be opportunities in China, especially in the property company sector,” Wilbur Ross, head of WL Ross, told the FT. “There’s a huge amount of property company bonds already trading at 20-30 per cent yields. I don’t think China will blow up, but some of the companies there will.”
Kohlberg Kravis Roberts and BlackRock have expressed interest in buying Axa Private Equity, the French alternative asset manager that has been put up for sale by Axa, the French insurer, the FT says, citing people close to the situation. The two US asset managers are among a handful of potential bidders that have been asked to submit first-round offers for the private equity group early next week. The private equity group’s management and Axa, its parent company, have preselected potential bidders in the past few weeks, they added. Dominique Senequier, the well respected French manager who started Axa Private Equity 15 years ago, is seen as the linchpin for any deal.
China International Capital Corp will become the country’s first investment bank to manage a trust company, the FT says, with a new venture likely to launch later this week, according to a person familar with the matter. The move by CICC underscores how China’s little-understood trust sector has become one of the fastest growing parts of its financial system and a source of innovation lacking in traditional banks. CICC will take a 35 per cent stake in Zheshang Trust, based in the wealthy eastern city of Hangzhou. Although the majority will be held by an arm of the Zhejiang provincial government, CICC, which is partly owned by US private equity groups TPG Capital and KKR, will have primary responsibility for management.
Jon Winkelried, former co-president of Goldman Sachs, has signed on as an adviser to a new credit fund being raised by buy-out firm TPG, according to marketing materials reviewed by the FT. The TPG Specialty Lending Fund represents the latest attempt by private equity firms including TPG, KKR, Apollo and GSO, the credit arm of Blackstone, to fill a void in middle-market business lending created by the financial crisis. Mr Winkelried has been out of the spotlight since his surprise departure from Goldman in 2009. TPG has recruited other executives from middle-market lending, such as Michael Fishman, formerly of Wells Fargo, who serves as chief executive and president of the venture. The TPG fund plans to raise $750m initially, with $50m coming from TPG.
The Taiwanese government has blocked a plan by Kohlberg Kravis Roberts and the chairman of Taiwan’s Yageo Corporation to take the electronic components manufacturer private in what would have been Asia’s biggest private equity deal this year, says the FT. Wednesday’s rejection is a blow to Taiwan’s reputation as a destination for foreign investment, coming after a string of similar rejections or delays imposed by the government on large cross-border mergers and acquisition deals. The most notable example was AIG’s two-year attempt to sell Nan Shan, its Taiwan subsidiary, which is only now nearing completion.
KKR and TPG have backed away from bidding for a majority stake in Nokia Siemens Networks, leaving only one interested consortium in what has a slow and cumbersome sale process for the ailing telecoms equipment company. Several people close to the situation told the FT that the US groups dropped out after failing to agree both on price and the level of control over the company that could be worth several billion dollars. Their withdrawal comes amid growing uncertainty over the unit’s part-owner, Nokia. Chief executive Stephen Elop rejected as baseless rumours claims that the company’s plunging value has made it a takeover target.
Kohlberg Kravis Roberts will see a return of almost treble its investment in Hilcorp Resources, a shale gas venture, the FT reports, illustrating how hydraulic fracturing technology is leading to big gains for investors. KKR last year placed $400m in a joint venture with Hilcorp Energy to develop its Eagle Ford Shale project in Texas. On Wednesday, KKR said that Marathon Oil would pay $3.5bn for the unit, of which $1.13bn goes to KKR. In its first-quarter letter to investors, KKR had valued that stake at 1.5 times its cost. WSJ Deal Journal says Chinese companies are “tripping over themselves” to plunge into shale.
Kohlberg Kravis Roberts will see a return of almost treble its investment in Hilcorp Resources, a shale gas venture, illustrating how hydraulic fracturing technology is leading to big gains for investors, reports the FT. KKR last year placed $400m in a joint venture with Hilcorp Energy to develop its Eagle Ford Shale project in Texas. On Wednesday, KKR said Marathon Oil would pay $3.5bn for the unit, of which $1.13bn goes to KKR. In its first-quarter letter to investors, KKR had valued that stake at 1.5 times its cost. This is the second big gain for KKR in shale gas. In 2009, it took a minority stake in East Resources, an oil and gas business based in Pennsylvania that was sold to Royal Dutch Shell a year ago. KKR’s $330m investment returned $1.5bn. KKR has formed RPM Energy, a joint venture with a former Texaco executive.
Barack Obama has selected John Bryson, former chairman of Edison International, the US energy group, to be commerce secretary, finalising the transformation of the president’s economic team and adding a voice from corporate America to his cabinet, the FT says. Bryson, who serves on the boards of Walt Disney and Boeing and is a senior adviser to KKR, the private equity group, would, if confirmed by the Senate, replace Gary Locke, former governor of Washington and nominee to be US ambassador to China. Bloomberg reports choice of a private sector executive for the commerce post is the latest move by Obama to repair relations between the White House and the business community that were frayed by disagreements over the administration’s overhaul of health-care and financial regulations.
US buy-out group KKR was buoyed by improved capital markets and a modest rise in the value of its private equity portfolio to report a 10% rise to $742.5m in its economic net income for the first quarter, reports the FT. The value of its private equity portfolio rose by 6.5%, against a rise in the S&P 500 index of 5.9% for the quarter. It also more than doubled its dividend pay-out to 21c from 8c a year ago. KKR took advantage of the recovery in the markets in the past two years to list eight of its companies which have gained 49% on average since going public. This quarter it publicly listed three holdings, including hospital group HCA and Chinese leasing firm First Eastern. Thanks to such activity, KKR was able to return $3.5bn to the investors in its funds. The group is pursuing a more diversified strategy in efforts to close the gap with rival Blackstone Group, which has more than twice KKR’s $61bn in assets. Blackstone reported a 58% rise in its economic net income to $568m for the quarter.
US buyout firm KKR has sealed Vietnam’s largest private equity deal with an agreement to pay $159m for a 10% stake in Masan Consumer, the country’s biggest producer of fish sauce, reports the FT. The acquisition highlights a shift by big buyout groups towards emerging markets and smaller deals as they look to rapid economic growth rather than high debt levels to generate returns. The Masan deal, set to be unveiled on Wednesday, is KKR’s first in Vietnam, where the dominance of state-owned groups and economic instability has deterred many private equity investors. Masan Consumer is controlled by Masan Group, one of Vietnam’s biggest private sector companies, which is listed on the Ho Chi Minh Stock Exchange with a market cap of about $2bn.
RAB Capital, one of the UK’s top hedge fund managers, has been hit by a wave of redemption requests from investors in its flagship fund, three years after damaging losses forced it to prohibit withdrawals from the vehicle, reports the FT. Investors have this week filed to pull $370m from the $470m RAB Special Situations fund at the first opportunity they have had to withdraw money since 2008. The fund was hit by the financial crisis when ill-timed bets, including an 8.2% stake in stricken lender Northern Rock, triggered huge losses. Insiders at RAB hope the outflows will mark a turning point and allow the firm to concentrate on rebuilding assets. The level of redemptions is “in line” with expectations, the company said.
Kohlberg Kravis Roberts and the chairman of Taiwan’s Yageo Corporation have launched a bid to take the electronic components manufacturer private, reports the FT. The deal, which values Yageo at $1.6bn, comes at a time when technology groups are re-examining supply chains and seeking alternative suppliers after the Japan earthquake.
US buyout group KKR and the chairman of Taiwan’s Yageo Corp have launched a bid to take the electronic-components manufacturer private in a deal that values the company at $1.6bn, reports the FT. Yageo is one of the world’s biggest producer of chip resistors and the third-biggest producer of ceramic capacitors. KKR and Pierre Chen, who founded Yageo in 1977, have offered to acquire all of Yageo’s Taiwan-listed shares for T$16.10 each, a 14% premium to Yageo’s last closing share price. Chen and KKR collectively control 34.3% of Yageo’s shares. After the deal, Chen will be Yageo’s biggest shareholder with a 55% stake, while KKR will take the remaining 45%.
Pfizer has agreed to sell its Capsugel business to private equity group KKR for $2.375bn in cash, in a move analysts said could be the first in a series of spin-offs and sales, the FT reports. The disposal, announced on Monday, will allow Pfizer to buy back common stock this year in excess of its planned $5bn in repurchases. Pfizer also lowered its revenue forecasts for 2011 from $66bn-$68bn to $65.2bn-$67.2bn and trimmed its 2012 revenue guidance. Pfizer’s sale of Capsugel, which earned about $750m in revenue last year, and its unchanged earnings guidance despite the resulting drop in sales suggest Pfizer may spin off other businesses. The company this year unveiled a strategic review to take place under CEO Ian Read. The WSJ says other units that Pfizer could sell include those producing animal drugs, nutritional products including Promil infant formula, and consumer health-care goods as Advil pain and cold medicine.
Pfizer has agreed to sell its Capsugel business to US buy-out group KKR for $2.375bn in cash, in a move that analysts said could herald more spin-offs and sales in the sector, reports the FT. The disposal, announced on Monday, will allow Pfizer to buy back common stock this year in excess of its planned $5bn in repurchases. Pfizer also lowered its revenue forecasts for 2011 from $66bn-$68bn to $65.2bn-$67.2bn and trimmed its 2012 revenue guidance. Pfizer’s sale of Capsugel, which earned about $750m in revenue last year, and its unchanged earnings guidance despite the resulting drop in sales suggest Pfizer may spin off other businesses. The company this year unveiled a strategic review to take place under Ian Read, the CEO appointed in late 2010 after the abrupt departure of Jeff Kindler. The WSJ looks at other possible disposals for Pfizer.
Apollo Global Management said on Tuesday night it had priced its initial public offering at $19 a share, raising $408.5m, reports DealBook. The offering, which drew strong investor demand, was expanded to 21.5m shares from 18m, the firm said. Existing investors in Apollo, including Goldman Sachs, also sold nearly 8.3m shares. Apollo’s underwriters have the option of selling an additional 4.5m shares if necessary, meaning the firm could raise a total of $494m. Apollo’s shares are set to begin trading on Wednesday morning on the New York Stock Exchange, under the ticker “APO.” The offering finally admits Apollo into a small club of publicly traded buyout firms that includes Blackstone, KKR and Fortress.
HCA, the hospital group taken private in 2006, has raised $3.8bn in the US’s largest private-equity backed initial public offering, reports the FT. HCA and its backers, Bain Capital, KKR and Bank of America’s private equity arm, along with the Frist family who founded the company, sold 126.2m shares, up from an initial plan to sell 124m shares. The price of $30 a share was at the top of the projected range. They also have an option to sell 18.9m more shares, up from the original “greenshoe” offering of 18m shares. If those shares are sold, the deal will raise $4.4bn, becoming the world’s biggest private equity-backed IPO, according to Dealogic. It is also, notes DealBook, one of the most successful leveraged buyouts of the credit boom. DealJournal examines HCA’s IPO by numbers.
Bain Capital, KKR, Bank of America and the brother of former US Senate majority leader William Frist are each in line to make nearly $3bn in the IPO of HCA from their $1.2bn investment in the 2006 leveraged buyout of the US hospital chain, reports the WSJ. The gain – about 250% over five years – would represent one of the largest ever from a private-equity deal. Ironically, the windfall could grow further under President Barak Obama’s health-care overhaul. HCA co-founder Thomas Frist Jr, older brother of Sen Frist, contributed $950m and received a nearly 19% stake in the newly private company. About 1,400 HCA executives also received equity. Sen Frist, Republican majority leader at the time, didn’t play a role. The IPO is set to price on March 9, adds Reuters.
Spanish lender Santander, US asset manager BlackRock and the investment group of former Citigroup executive Bob Willumstad are among would-be buyers of Citi’s consumer finance arm, which could fetch about $2bn, reports the FT. Willumstad, who left Citi in 2005 and later became chairman and CEO of insurer AIG, has teamed up with Blackstone and Carlyle, said people close to the matter, as private equity bidders scramble to join the auction. KKR is working with BlackRock on a possible bid for the unit, previously known as CitiFinancial. Bloomberg adds the group is one of at least four competing for the business, which has about $13bn in assets.
Axel Springer, the German newspaper and online publisher, on Wednesday denied rumours it was considering a repeat of its ill-fated attempt six years ago to buy German TV company ProSiebenSat.1, reports the FT. Chief executive Mathias Döpfner said there were “no talks” and Springer had “no plans” to buy Germany’s second-largest free-TV company, which buy-out firms KKR and Permira are looking to sell later this year. Dopfner said that after its bid in 2005 was blocked by media regulators, Springer had adopted a successful alternative strategy of internationalising and digitising its core print business, including the mass market tabloid Bild.
KKR announced Wednesday that Q4 2011 net income rose 39 per cent to $714.6m from $515.3 m in Q4 2010. This nudged us into thinking back to 2007:
West Australian Newspapers has agreed to buy Seven Media Group in a deal valued at A$4.1bn (US$4.2bn) including debt, creating one of Australia’s top media groups with interests spanning television, print media and internet platforms, reports the FT. The deal, announced on Monday, is led by Kerry Stokes, the billionaire chairman of West Australian Newspapers, whose Seven Group Holdings already owns a 45 per cent stake in Seven Media. Kohlberg Kravis Roberts, the US private equity group, also owns 45 per cent in Seven Media.
Warner Music has asked for preliminary bids this week for its music publishing company or for the entire group, with interest expected to come from private equity groups and from Len Blavatnik, an existing shareholder in the US music group, reports the FT. Warner and Access Industries, the property, resources and media group run by the Russian-born US billionaire, would not comment, but people close to the auction process said Blavatnik was considering making a first round offer within days, and that he is chiefly interested in Warner-Chappell, which manages copyrights to a wide range of songs. Buy-out groups led by KKR, which owns the smaller BMG Music Publishing through a joint venture with Bertelsmann, have also shown interest since January, when Warner appointed Goldman Sachs and AGM Partners as advisers.
Nielsen Holdings on Tuesday saw strong demand for its IPO, which priced at $23 a share, above the projected range of $20-$22 a share, reports the FT. The book for the media and consumer tracking company was “many times” subscribed in a deal seen as an indicator of investor appetite for private equity-owned companies. The sale of 71.4m shares, or a 20% stake, raised $1.6bn. If an over-allotment of shares is exercised, the listing could raise as much as $1.9bn. Demand Media, an online content company, also priced an IPO late on Tuesday night at $17, above its projected range of $14-$16, and increased the number of shares from 7.5m to 8.9m, raising $151m. Nielsen, taken private in 2006 by six buy-out firms including KKR, THL, Blackstone and the Carlyle Group. will begin trading on Wednesday on the Nasdaq. The offerings, notes DealJournal, could set a festive mood for the 2011 IPO market.