History’s a poor guide to corporate value 26 Mar 2007 Shares of many bluechips trade at valuation multiples well below those seen in recent years. But that doesn't mean they re a good buy. Valuation is more art than science, and multiples change over time. Investors shouldn t bet that the past will repeat itself.
Investors are spoilt for choice in Russia 26 Mar 2007 Magnitogorsk Iron & Steel Works the next Russian IPO plans to raise about $1bn. But it won t be a cakewalk. The Russian IPO pipeline is set to top $30bn in 2007, so investors can be choosy. This deal will be a test case after recent equity wobbles.
Some credit investors have power 26 Mar 2007 Excess liquidity has given borrowers the upper hand almost everywhere. But European highgrade lenders have clawed back some ground. Marks & Spencer is the latest borrower to offer protection against junking. The explanation: excess liquidity has made the risk unbearable.
Blackstone’s governance-lite equity 26 Mar 2007 Private equity firms have squeezed creditors by issuing paymentinkind and covenantlite loans. Blackstone is doing the same to investors in its IPO, who will likewise enjoy few of the protections traditionally afforded shareholders.
CLOs susceptible to a fire sale 23 Mar 2007 If the managers of these funds of highrisk debt take fright, they might try to head for the exit simultaneously, causing a rout. There would, of course, have to be a trigger. But if the market jitters of recent weeks return, CLOs could be a flashpoint.
UK public-to-private isn’t that easy 22 Mar 2007 But how many of these deals will actually get done? Private equity may have the cash. But public company boards still have the whip hand. Sainsbury s, Boots, Whitbread, Pearson: hardly a day passes without another UK public company being linked to a possible private equity bid.
Congress is right to target carried interest tax 22 Mar 2007 It makes no sense for buyout barons to pay the capital gains rate on what is really, for the most part, fee income. So why are politicians only figuring it out now? That's simple: The birth of the megafund has dramatically changed the calculus.
ACS shareholders should resist LBO offer 21 Mar 2007 The consulting company deserves to be private. Shareholders haven t earned money in years while executives have enjoyed many perks. But the management buyout offer on the table of $5.9bn looks insufficient. After all, the company turned down a higher bid just last year.
Mid-sized private equity firms take relaxed stance on buyout debate 21 Mar 2007 Some say they should be more engaged. Sir David Walker s transparency group is stuffed with big firms that may impose more red tape on them. But there's not an obvious conflict of interest between big firms and smaller ones. And anyway, any code Walker produces will be voluntary.
Private equity tax: US Senate shows the way 20 Mar 2007 The US Senate is considering changing the tax treatment of private equity s carried interest so that it is taxed as income not capital. The UK chancellor Gordon Brown should take note. Private equity does not need this tax break. He should use tomorrow s budget to remove it.
LBO borrowers have lenders over a barrel 19 Mar 2007 TDC isn't bothering to refinance its buyout debt. It is simply "repricing" its existing debt to get a better deal. Lenders have little choice but to comply. Despite the turmoil in US subprime borrowing, it seems demand for LBO debt is stronger than ever.
Loose lending may ensnare LBO borrowers 19 Mar 2007 Easy terms on LBO loans will give fundamentally strong companies extra breathing room to ride out economic downturns. But those with serious problems could use this flexibility to delay tough decisions, increasing the risk they will eventually default. Socalled "covenantlite" LBO loans will give fundamentally strong companies extra breathing room to ride out an economic downturn.
LBO shops still have the whip hand over bond investors 19 Mar 2007 US bond investors are howling after discovering some poison puts safeguards against LBOrelated losses are not that toxic. In the tugofwar between debt investors and LBO shops, the former will only prevail if there is enough hemlock in the chalice.
Blackstone to show the benefits of going public 16 Mar 2007 The buyout giant is considering an IPO. Yet boss Steve Schwarzman s pitch is that life is sweeter free of the myopia of public shareholders. But there s one advantage to the public markets. They allow entrepreneurs like Schwarzman to cash out of their creations during boom times.
Could subprime meltdown derail LBO boom? 16 Mar 2007 Carlyle s boss points to several factors that could trigger the end of the private equity bonanza, from a terrorist attack to rate hikes. One missing from his list is the subprime debacle. Problems with mortgage loans could well affect investor appetite for buyout debt.
Why trade unions are wrong about private equity 16 Mar 2007 Trade unions are gathering in Paris today to vent their spleen about private equity. As usual in matters of economics, they miss the point. They would do far better to ask what has gone wrong with public companies and what can be done about it. They may not like the answer.
Pru comes up with shrewd UK restructuring plan 15 Mar 2007 The UK insurer has eschewed the year zero solution of selling the UK business, partly because it wouldn t have got a good price. But the moves it s making should enhance value, while leaving all options open. That said, after past screwups, good execution will be key.
ICE’s $10bn bid offers more than money 15 Mar 2007 A better price isn t the only thing the electronic exchange s bid for the CBOT has going for it. Its deal offers fewer antitrust worries. And merging with ICE would give CBOT owners more control. To offset this, the CME will have to pay up.
L&G raises investors’ hopes for capital return 14 Mar 2007 The insurer has two reasons to cheer. It grew profits and new business fast last year and dug out excess capital at the same time. That will raise investors expectations of a rich payout when L&G puts a figure on the capital it plans to return later this year.
Alternative assets fail investors 12 Mar 2007 Hedge funds, commodities and real estate are supposed to protect portfolios against stock market downturns. But the recent market jitters show they aren t meeting that promise. Government bonds and cash are better diversifiers.