PC Symposium
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The world's second-largest sovereign wealth fund, Norway's Government Pension Fund-Global, is ramping up its investment in European equities and plans to set up its own private equity unit....
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At The Deal's Fifth Annual Private Capital Symposium, Richard Shinder, a director at Goldman Sachs Special Situations Group Inc., spoke about the important changes that have come out of covenant-lite debt terms. "We were in a very aggressive debt financing market for the last several years, even in the middle market," Shinder said. "Even where there is traditional financing covenants, you have looser covenants and a lesser degree of equity in the deals. And then related to that is the dramatic amount of sponsor activity ... the more traditional sponsors acquiring businesses with high degrees of leverage and with relatively...
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At The Deal's Fifth Annual Private Capital Symposium, Steven Rattner, managing director of DLJ Merchant Banking Partners, explained why it is easier to create value in middle-market companies. There is a difference in creating value from middle-market deals to large-cap deals, he said. "When you buy a $20 billion market cap company, those companies have their own languages and religions. ... In today's type of markets, where it is about creating value in the companies you own, it is easier to create that value in middle-market companies," Rattner explained....
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At The Deal's Fifth Annual Private Capital Symposium, Peter Schoenfeld, chairman and CEO of P. Schoenfeld Asset Management LLC, spoke about private equity transactions and shifting dynamics. In terms of buyouts, Schoenfeld said private equity buyers should expect a shift in dynamics. "As a buyer the expectation is going to have to be more risk than strategics. They are going face to face in a public environment, and there are a whole source of disclosure issues," Schoenfeld said....
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At The Deal's Fifth Annual Private Capital Symposium, Raquel Palmer, a partner at KPS Special Situations Fund, discussed distressed markets and opportunities in the marketplace. Palmer said that there is a downturn in the market that is going to last at least 36 months, which has been fueled by the debt market. "The best companies that we are looking for are companies that have fixable operational problems and tend to have a large market share," Palmer explained....
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At The Deal's Fifth Annual Private Capital Symposium Mathew Lori, managing director at New Mountain Capital LLC, and Alan Jones, co-head of global private equity at Morgan Stanley, discussed private equity transactions and how leveraged lending markets are affecting middle-market company valuations. "Because it is hard to get access to credit, you know the valuations are more reasonable, and you can structure them better. And I think that for fundamentally good companies, those deals still will trade," Lori said. "This environment is and should be one of the greatest environments for putting money to work in private equity," Jones said....
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At The Deal's Fifth Annual Private Capital Symposium, Diane Vazza, a managing director and head of global fixed-income research at Standard & Poor's, spoke about what her firm is doing to restore ratings credibility. S&P itself has instituted 27 voluntary actions to raise credibility of the ratings for distressed investors, Vazza said. "These are not mandated by any regulatory authority, but the voluntary actions are items that managers at S&P served up based on concerns in the market that would help bring more transparency to the ratings and restore credibility to the ratings."...
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At The Deal's Fifth Annual Private Capital Symposium, David Storper, a senior managing director with WL Ross & Co., and Gary Talarico, a Sun Capital Partners managing director, discussed distressed investment and covenant-lite deals. "We raised $6 billion assuming this kind of downturn," Talarico said. "It came faster and with more viciousness than we expected."...
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At The Deal's Fifth Annual Private Capital Symposium, Steven Rattner, managing director of DLJ Merchant Banking Partners, spoke about the effect the economy is having on middle-market deals."It is certainly having quite a bit of turmoil today, though not as much as in the large-cap deals. We are seeing that it is harder to get financing. The financing we are getting today for new deals is certainly at a lower leverage level," he added....
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At The Deal's Fifth Annual Private Capital Symposium, Gary Parr, vice chairman at Lazard, gives his perspective on the fall of Bear Stearns Cos. "There was a run on the bank." "None of us," he said, "has ever seen anything like this. ... In the span of two days, money market funds that were holders of short term funding for Bear Stearns ... decided, 'I don't want to hold this name anymore.' "...
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At The Deal's Fifth Annual Private Capital Symposium, Jonathan Lynch, managing director of CCMP Capital, explained that even though there is more constraint in the deal economy, there are significant opportunities still out there in the marketplace. It is the sourcing of the deals that are different, Lynch said. The deals are not going to the major investment banks, but to a smaller set of acquirers. "What you are seeing out there are families and entrepreneurs that do have an interest in selling properties or arriving at some form of liquidity for their estate, and they are trying to...
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At The Deal's Fifth Annual Private Capital Symposium, John Eydenberg, managing director and the head of leveraged finance at Deutsche Bank Securities, discussed the debt markets and the long-term effects of the credit crisis on deal structuring. "I think at we sit here today there is a lot of good news in the market. If we have a continued increase in the markets, I think it is fair to say we would be optimistic to see a return to more normalized markets where a regular way of leveraged financings gets done," Eydenberg said....
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At The Deal's Fifth Annual Private Capital Symposium, Carlyle Group managing director Michael Zupon shared his thoughts on the leveraged finance markets and the recession. Zupon had some kind words for the Federal Reserve. "What the Fed did at the end of the first quarter was brilliant," he said....
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At The Deal's Fifth Annual Private Capital Symposium Marc Kramer, managing director at Fenway Partners Inc., James Epstein, partner at Pepper Hamilton LLP, and Steven Rattner, managing director at DLJ Merchant Banking Partners, spoke about the middle-market valuations. "I think sellers are understanding that the type of multiples they could sell at in '06 were unprecedented, unrealistic and probably not going to happen again in the near future," Rattner said. "I would say there are still a lot of private equity firms that are sellers in this market, and while their outward communication may be, 'We would like to wait...
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At The Deal's Fifth Annual Private Capital Symposium, James Epstein, a partner at Pepper Hamilton LLP, spoke about deals in the middle market. In this clip, Epstein outlines some of the trends he is seeing in regards to financing middle-market transactions. "I think that one of the things that we will start to see, and I know that we have already started to see in some of the larger cap funds, is that some of the larger cap funds are investing in middle-market transactions because they are looking for places to put their money. I think we are also going...
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At The Deal's Fifth Annual Private Capital Symposium, Diane Vazza, a managing director and head of global fixed-income research at Standard & Poor's, spoke about distressed investments and default rates. Vazza said that there are about 236 distressed companies in the US and defaults are increasing. Vazza outlines both the best case and worst case default scenarios. "The best case would be a default rate in the next 12 months of 3.7%, which means that 59 companies would default. In order to get to our worst case which is 8.5%, 136 companies would have to default in the next 12...
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At The Deal's Fifth Annual Private Capital Symposium Hamilton "Tony" James, the president and COO of the Blackstone Group LP, spoke about his firm's dealflow and attributed its success to its investment strategy.James said that the real value in the corporate market evolves around leveraged loans. "Capitalizing on the credit crunch itself we have bought several portfolios or individual names of debt that is sitting on the balance sheet of the banks. Many of those banks are either motivated to sell by regulatory pressures, capital pressures, or to please markets and they don't really think for the most part that...
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At The Deal's Fifth Annual Private Capital Symposium, Gary Parr, vice chairman at Lazard, spoke about the rise of sovereign wealth funds. In this clip, Parr explains why sovereign wealth funds are on the rise. "There are two real causes. One is the price of oil. ...The second is our trade deficit," he said. Parr also mentions the resistance to sovereign wealth funds and where most of these funds invest. "Roughly 80% of sovereign wealth funds invested in financial institutions in 2007. Of over 80% of those investments are in financial institutions, 50% are in securities firms ... and most...
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At The Deal's Fifth Annual Private Capital Symposium Hamilton "Tony" James, the president and COO of the Blackstone Group LP, spoke about the benefit of loose debt covenants. James attributes the lack of defaults in the face of a slowing economy to the covenant-lite debt terms portfolio companies received in the boom times. "Covenant-lite debt structures are not only private equity's interest, they're in everyone's interest...They benefit society, " James said. "I think everyone should go home and tell everyone they know that covenant-lites are a must." - The editors...
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Complete coverage of The Deal's Fifth Annual Private Capital Symposium: Tony James says covenant-lite is good for society Tony James on Blackstone's dealflow Midmarket deals easier to finance Carlyle's Zupon calls the Fed brilliant Deals in the middle market Video: Ken Moelis, LBO cycles, and crimes on Wall Street Deutsche Bank's Eydenberg on debt markets, and the bottom Morgan Stanley's Alan Jones on debt markets New Mountain's Mathew Lori on valuations S&P's Diane Vazza on default rates, recession KPS' Palmer on distressed investing Ken Moelis: Choice quotes from the Private Capital Symposium Video of Ken Moelis at The Deal's Private...
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