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...The cash from New Mountain, together with some debt financing, will be used to return capital to current partners, buy out retirement obligations to former partners and build a war chest for investment,...
...BDO last year took an alternative approach, opting to convert to an employee-owned corporation, funded by private debt....
...In their hunt for financing, many tiny firms have also turned to convertible debt deals — under which they borrow from a lender who has the option of being repaid in cash or new shares....
...The restructuring, to be announced on Wednesday, will reduce Learfield’s overall debt burden by more than $600mn, inject $150mn in new equity investment and transfer its ownership to the three private equity...
...With debt expensive and public market valuations high, some private equity players say acquisitions of partnerships could have more upside than other deals, and they point to lucrative exits on older buyouts...
...Such transactions might help to stem companies’ debt problems in the short term, while helping to preserve buyout firms’ equity....
...Such private investments in public equity — or PIPE — deals are relatively common in the US, offering private equity houses a downside-protected route into a company’s share capital....
...These partial cash-outs, depending on how much debt a portfolio company has already paid off, can raise overall leverage and interest burdens....
...The high cost of debt has torn up the industry’s traditional playbook, which focused on leverage to juice up returns....
...A strong Chinese recovery could also challenge the recent performance dominance of US equities, either directly or indirectly via Japanese or European assets....
...These funds have become very popular with institutional investors seeking stable returns that can persist even when equity markets fall....
...US private equity firms are rushing to take advantage of lower borrowing costs by loading debt on to their portfolio companies and using the cash to pay dividends to themselves and their investors....
...Private equity firms still own large stakes in dozens of former portfolio companies whose shares are languishing on the public markets....
...Investors last year also blocked a deal to sell a $440mn music rights portfolio to a sister fund run and backed by private equity group Blackstone....
...“It’s like a reset of the risk cycle,” said Evan Brown, a portfolio manager and head of multi-asset strategy at UBS Asset Management....
...The manoeuvres, which lenders have dubbed “defending the portfolio”, have cropped up as many older private equity funds run low on cash just as the companies they own struggle with their own debt loads....
...I also looked for red (or green) flags in debt ratios and historical growth rates....
...Under pressure to unblock their clogged portfolios, the latter will need to take unusual steps to get deals away....
...Last month, Warburg seeded a new insurance group called Prismic that will use it to manage a portfolio of private equity investments. Warburg is also undergoing succession planning....
...That is particularly the case for real estate funds, but it is also seen in private debt and private equity portfolios....
...Over the past five, for example, the second worst performing ETF in my portfolio — UK equities — has twice the total return. I was running out of patience but kept convincing myself to hold on....
...Last year private equity group Francisco Partners agreed to buy financial data provider Macrobond for almost €700mn, while in 2022 Permira gained control of Reorg in a deal that valued the distressed debt...
...The equity risk premium (ERP) is more subjective. ERP is usually defined as the excess return, above the 10-year Treasury yield, an equity investor requires to hold a portfolio of stocks....
...It means that the private equity group’s “equity” infusion was actually just debt placed elsewhere....
...The filing also shows that at the end of 2022, the company had net debt of $5.8bn....
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