Flashes from Bloomberg:
*DELL IS SAID TO BE IN TALKS TO GO PRIVATE Read more
The big leveraged buy-out groups of the credit boom have gained renewed access to funds as the junk bond market has rallied and buyers have flocked to the highest-yielding assets, says the FT. Energy Future Holdings, Realogy and Caesars Entertainment, formerly Harrah’s, are among those groups controlled by private equity funds that have sold junk bonds in recent weeks as they seek to manage their overburdened balance sheets. The capital markets have reopened to highly indebted companies after central banks moved to keep official rates low and sentiment in US and European markets has improved. The renewed appetite for risk has given a partial reprieve to some private equity-owned companies from looming debt repayments. Read more
Bloomberg Businessweek has an update on the latest refinancing efforts of Energy Future, previously called TXU and once known as The Biggest Leveraged Buyout of All Time.
Bought for $43bn by private equity groups KKR and TPG in 2007, the company’s revenues nosedived along with the price of natural gas and it is now trying to extend the maturity of its loans coming due this year — and will pay a hefty price for the privilege: Read more
FT Alphaville noted last week that Citi analysts were predicting a return to the heady pre-crisis levels of leveraged buy-outs.
But, they argued, this time is kind of different: there will be fewer “mega-deals” (>$7bn) and the CLO business will be “a shadow of its former self.” Read more
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:
Private-equity shops are set to unleash a wave of public offerings of companies they control, beginning with this week’s expected IPO of Nielsen Holdings – the largest private-equity-backed IPO in the US in nearly four years, reports the WSJ. The last flood of such IPOs, in 2004-06, generated annual returns of about 35% for the leveraged-buyout firms and their investors, say people involved in those deals. This time, investors in LBO firms are especially eager for profits. Many firms have handed back only small amounts of cash to investors in funds launched around 2006. But, notes the Journal, the gains, while decent, “are likely to be more meagre than in the past”. Read more
The leveraged-loan market has climbed back from its collapse during the crisis, recording its busiest year since 2008 as investors chase yield, reports the WSJ. A quarter of issuance is now based around leveraged buyouts rather than refinancing old loans — while more companies are using the debt to pay dividends. Investors are however resisting dividend strategies, indicating the market isn’t as bubble-prone as before the crisis. Maybe, says FT Alphaville; investors would do better to focus on the $550bn of leveraged loans that will have to be refinanced in 2013 and 2014. Read more
A Moody’s report on private equity reveals a paradox inherent to highly-leveraged buyouts: they’re a good idea in times of distress, but less positive for the firms involved when times are good. FT Alphaville has more. Read more
It’s a €120bn-high mountain of maturing debt in Western Europe.
1'Collectively, humanity has yawned and decided to let the dangers mount'
2Man walks into a gold bar. Au!
3The end of QE?
4Rise of the funding altruists
5The persistent supply-side constraints in US housing
Show more6Bird, plane, Abe
7Bove vs Bloomberg, redux
8Risk goes on, Risk goes off
9A glorious episode in the history of the Revenue
10Stress you next year
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