Filed under: Rumors, Raising money, Madison Dearborn Partners, Private equity industry

Madison Dearborn Partners LLC isn’t letting the current environment get in the way of fund raising, at least not according to a report in The Deal. The private equity firm is looking overseas and is including sovereign wealth funds for a new private equity fund of up to $10 billion.

This also notes that the first round of the fund closed at $4 billion in mid-April with investments from existing limited partners. But there are also reported problems in the capability to raise funds if the sources are accurate.

The Deal is citing a “a well-placed source.” Perhaps a memo should be passed out around the firm with the mere message, “Loose lips sink ships.”

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Filed under: The Blackstone Group, Raising money, Private equity industry, Investments

The Blackstone Group (NYSE: BX) has entered into its second large-scale substitute energy project. The private equity giant has announced that it will form a partnership with Windland Energieerzeugungs GmbH to finish the development and construction of Meerwind.

This is being billed as one of the North Sea’s largest wind farm projects. The wind farm will comprise 80 wind turbines with a combined generation capacity of 400MW. The project will be located some 80 kilometers (approximately 49 miles) off of the northern coast of Germany in the North Sea and is expected to cost in excess of €1 billion (almost US$1.6 Billion) to build.

The area management plan for the future wind farms in the North and East Sea was introduced by the German government in July, 2008 and supports local government objectives in fighting global warming by reduction of its greenhouse gas emissions by 40% by the year 2020.

The wind farm will generate approximately 1.6 billion KWh annually and will provide enough energy to supply electricity to some 500,000 households.

This will be Blackstone’s second significant investment in renewable energy after the financial closing of the $870 million Bujagali hydroelectric power station project in December 2007 by Blackstone’s 80% owned portfolio company called Sithe Global.

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Filed under: Management, The Blackstone Group, Engagements, Private equity industry

I received an interesting email alert this morning from The Blackstone Group (NYSE: BX) regarding the addition of a new Board of Directors member. The addition is Richard H. Jenrette.

Board member additions are usually not stock events or at least not actionable events, but Mr. Jenrette is founder of DLJ, or Donaldson Lufkin & Jenrette (”DLJ”). That firm was founded in 1959.

DLJ wasn’t exactly an institution that went without problems through the years, but it was built essentially from scratch to a multi-billion dollar behemoth in the financial sector with operations in trading, brokerage, investment banking, advisory, clearing, and more. Ultimately it was acquired by Credit Suisse Group (NYSE: CS), and its discount brokerage operations were acquired by E*TRADE Financial Corp. (NASDAQ: ETFC).

Mr. Jenrette is also also a former Chairman of the Securities Industry Association and has served as a director or trustee of The McGraw-Hill Companies, Advanced Micro Devices Inc., the American Stock Exchange, The Rockefeller Foundation, The Duke Endowment, the University of North Carolina, New York University and the National Trust for Historic Preservation.

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Filed under: Private equity industry

In one of the least convincing editorials in current memory — no small accomplishment — Service Employees International Union international president Andy Stern argues that “short-term capital infusions from private-equity funds will only make the banking crisis worse, by encouraging risky behavior and abusive banking practices.”

He’s so wrong. Risky behavior is encouraged by compensation systems that reward returns regardless of risk, supine directors lacking true independence, and an ownership structure so diffuse that there is no one to enforce accountability.

A private equity fund with a huge equity stake and no ulterior motives — they make money from increased shareholder value, not fees and bonuses — which paid cash for their shares is the best thing for shareholders. The one valid point that Stern makes is this: “It’s hard to imagine private-equity funds resisting the urge to double down on the tactics banks have used to drive profits in current years - unfair lending practices, higher fees, and exorbitant interest rates on credit cards and other consumer products.”

That’s probably true — private equity funds might push public companies to improve their profitability, but that’s their job. Consumer protection is the domain of regulators, and publicly-traded banks have a responsibility to increase their profits as much as possible within the confines of the law.

We shouldn’t blame private equity for lax regulation.

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Filed under: Deals, Management, Top deals, Private equity industry, Investments, Value and lack thereof

Almost everyone thought of the Penn National Gaming Inc. (NASDAQ: PENN) private equity LBO merger as dead money for quite some time. It only officially became a dead merger this morning. This was the last of the huge multi-billion deals still officially on the books that was put together back before we had a full blown credit crunch.

PNG Acquisition Company Inc. was the buyout entity, which was indirectly owned by certain funds managed by affiliates of Fortress Investment Group LLC (NYSE: FIG) and Centerbridge Partners, L.P.

The buyout price of $67.00 per share was older than Methusela. Since January, this stock slid steadily from over $60.00 down to under $30.00. The deal was a known to be dead by everyone. But there is actually a silver lining here for the company. Penn National will get $1.475 Billion in cash out of this.

Affiliates of Fortress, affiliates of Centerbridge, affiliates of Wachovia, and affiliates of Deutsche Bank will all be holders of those notes. To top it off, Fortress Investment Group’s Chairman & CEO, Wesley Edens, will join the Penn National Gaming Board of Directors.

Keep reading for on the fly analysis, guidance, and ramifications at 247wallst.com.

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Filed under: Deals, Financials and analyticals, Private equity industry, Investments, Value and lack thereof, Public or private?

There is a rather interesting deal out there that can be viewed as a glass half-full or glass half-empty depending on whether or not you’re from the private equity side or from a public company.

Fiserv Inc. (NASDAQ: FISV) has announced a rather interesting move this morning. It is selling a majority interest in its insurance business operations for some $510 million in equity and debt to Trident IV, a private equity fund managed by Stone Point Capital LLC.

The company has announced that it will turn around and repurchase up to 10 million shares of common stock in a repurchase program.

You can continue reading for the full details, on the fly analysis, and ramifications at 247Wallst.com.

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Filed under: Rumors, Engagements, Private equity industry, Investments, Public or private?

Krispy Kreme Doughnuts, Inc. (NYSE: KKD) gave some very uncommon volume trading alerts this morning, and the culprit here is nothing less than buyout offer chatter. Yep, it seems that the rumor mill has the fried dough maker as one of the next buyout candidates.

It took only about 35 minutes for us to see double the normal average daily trading volume. The culprit is a private equity buyout of $7.25 per share, yet no one comprehends if the “offer” is real. MGL Asset Management Group LLC out of Charlotte has been named as the suitor. Whether or not that is the case is something different entirely.

If you know the history of this company you probably understand that it is synonymous with “disappointment.” The buyout chatter price is $7.25, yet the 52-week trading range is $2.23 to $9.48. You can determine on your own whether or not an offer is a good as a take. Chatter on top of that is yet another issue.

Despite this having been covered on CNBC and despite the written reports above, it would take a lot more faith than sense to believe this until actual facts are released from either the private equity firm or Krispy Kreme itself.

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Filed under: Raising money, Venture capital industry, Private equity industry, Public or private?

If you have been following the alternative energy saga alongside ridiculous oil prices going from rising to high to astronomical, you’ve run across the name Tesla Motors. Tesla is a venture capital and privately funded auto maker that produces a high performance electric powered sports vehicle.

The Tesla Roadster and soon to be sedan are now both now going to be manufactured in California, or so a report in the San Francisco Chronicle and elsewhere are noting. Governor Schwarzenegger included some incentives that have kept the electric auto maker from moving manufacturing to New Mexico (besides the Governator ordering one unit for himself). But it appears that the Say of California is giving it more than mere tax incentives.

It appears that this is going to get equipment leases from the state, as well as additional allows. What’s interesting here is that this gets the company even further on the map. There have been current reports that Tesla was in the market for another large financing. Whether or not that comes about now isn’t certain. Other reports show that the company may even supply battery units to Daimler or other car manufacturers.

What is becoming fairly certain is that Wall Street expects to see Tesla file for an initial public offering. As capital intensive as these businesses are, the company needs to have a steady car (no pun intended) to be able to raise the capital it needs.

Think of the good news…. At least one US auto manufacturer will be considered cool.

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Filed under: Deals, Raising money, Warburg Pincus, Engagements, Venture capital industry, Private equity industry, Investments, Public or private?

Most private equity firms hunt for stable companies with stable cash flows that are either cheap or inefficiently operated. These companies can then be resold for more money or taken public, or the strategy can fit into the Warren Buffett time frame of “forever.” Biotechnology has long been the realm for only public companies, but that’s changing.

Private equity firm Warburg Pincus has already made some biotech plays that seemed to be a harbinger of the trends here, and even more so when you consider foreign drug companies buying US-based biotechs on the cheap with that US Peso of a currency we have.

A new fund called GANIC Pharmaceuticals has been launched this week, with Warburg Pincus as the main backer. the private equity firm made an initial investment in GANIC from the Warburg Pincus Private Equity X, L.P., a $15 billion fund which shut in April. As of now, we don’t have any exact launch figures for the size of the investment that was given to GANIC.

GANIC’s management is all former senior executives of MedPointe Pharmaceuticals and the company will will focus on building a substantial enterprise by acquiring revenue generating companies, portfolios, and/or products and by investing in innovation and acquiring pipeline development assets.

Read more at BioHealthInvestor.com for estimates of the size and strategies that the fund might employ.

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Filed under: Deals, Movers and shakers, Private equity industry, Value and lack thereof, Public or private?

Huntsman Corp. (NYSE: HUN) is seeing the value of its stock destroyed in after-hours trading. This was one of those pending mergers that was old enough that many had forgotten it was even on the docket. Hexion Specialty Chemicals has announced that it has filed suit in Delaware to exit its contractual obligations to acquire the company.

The Hexion-led filed to terminate its proposed $10.6 Billion acquisition of Huntsman Corp. Hexion has stated in this suit filed that it believes that the capital structure concurred to by both Huntsman and by Hexion for the combined company is no longer viable.

The reasons noted are because of Huntsman’s increased net debt and its lower than expected earnings. Hexion notes that both companies are individually solvent but it believes that the merger’s capital structure previously concurred to would render the combined company insolvent.

Keep reading at 247WallSt.com for the rest of the details and analysis.

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