Author: Reuters News

Belgian postal operator bpost will list a minority stake, currently held by private equity group CVC Funds, on the Brussels stock exchange, writes Reuters. The Belgian state will continue to hold a 50.01 percent stake in the former monopoly and will not sell shares in the offering.

Reuters – Belgian postal operator bpost will list a minority stake, currently held by private equity group CVC Funds, on the Brussels stock exchange, the group said on Thursday.

The Belgian state will continue to hold a 50.01 percent stake in the former monopoly and will not sell shares in the offering, bpost said.

Belgium also owns a majority stake in telecoms operator Belgacom, which is also listed on the Brussels stock exchange.

Bpost, which did not indicate when the initial public offering (IPO) would take place, said it plans to return at least 85 percent of its annual net profit to shareholders.

The group made an operating profit of 404 million euros ($520 million) last year, on revenue of 2.42 billion euros.

Bpost said that JP Morgan, Nomura and BNP Paribas Fortis would act as joint coordinators of the IPO.

The post Reuters – bpost to List on Brussels Exchange appeared first on peHUB.

U.S. private equity firm Carlyle Group LP is planning to raise 200 billion yen ($2 billion) for a third Japan fund to succeed its seven-year old second fund, with Japan’s aggressive monetary easing helping to boost investor interest, Reuters is reporting.

(Reuters) – U.S. private equity firm Carlyle Group LP is planning to raise 200 billion yen ($2 billion) for a third Japan fund to succeed its seven-year old second fund, with Japan’s aggressive monetary easing helping to boost investor interest, people with direct knowledge of the matter said.

Carlyle, the only global private equity firm with funds specifically designated only for Japanese investments, aims to tap investor appetite for alternative investments as Prime Minister Shinzo Abe’s government pushes monetary expansion to fight deflation, keeping interest rates low.
A Carlyle official in Japan declined to comment.

Carlyle co-founders William Conway, Daniel D’Aniello and David Rubenstein, as well as other senior officials, will be meeting investors in Tokyo on Thursday to discuss its new Japan fund as well as its global strategy, said the people, who asked not to be identified as the information was not public.

The new fund would succeed Carlyle’s second Japan fund, Japan Partners II, which was launched in 2006. The fund’s investment period is due to end this year and has already exited several of its investments, including software maker Broadleaf Co Ltd and restaurant chain operator Chimney Co Ltd.

Carlyle’s second Japan fund originally raised 215.6 billion yen but was reduced to 165.6 billion yen due to a lack of deals, which dried up in the wake of the global financial crisis.

Carlyle is raising the new fund at a time when investors have easier access to cash with low interest rates, said one investor who is considering participating in the fund. ($1 = 102.5450 Japanese yen)

The post Carlyle Plans to Raise $2 Bln for Japan Investments -Sources appeared first on peHUB.

Alinta Energy is planning a $1 billion-plus debt issue in the U.S. term loan B institutional market to refinance maturing debt, writes Reuters. Alinta is owned by TPG Capital.

Reuters – Private equity-controlled power firm Alinta Energy is planning a $1 billion-plus debt issue in the U.S. term loan B (TLB)institutional market to refinance maturing debt, banking sources familiar with the deal said, joining a growing number of Australian borrowers attracted by the terms and pricing available.

Alinta, controlled by U.S. buyout giant TPG Capital , is carrying A$1.2 billion ($1.17 billion) in senior term loans, an A$400 million super senior loan, as well as interest rate swaps of around A$210 million on a marked-to-market basis, according to the sources.

The sources declined to be identified because of the sensitive nature of the deal. Alinta’s spokeswoman declined to comment.

The emergence of the TLB market is causing grief to loan bankers already grappling with low credit growth in Australia.

“Every domestic Australian bank should be worried about leakage to this market. It is business we are missing out on,” said John Corrin, Australia & New Zealand Banking Group’s global head of loan syndications.

U.S. TLB issuance has skyrocketed, driven by a combination of increased money supply and investors’ drive for yield. Total volume year-to-date hit $282 billion, up 57 percent compared to the same period last year according to UBS.

Issuance by Australasian borrowers this year hit $3.74 billion, more than double the $1.48 billion of leveraged loans done in Australia according to Loan Pricing Corp data.

ATTRACTIVE TERMS

The TLB market offers attractive pricing over longer tenors compared to the Australian bank loan market. Currently borrowers can refinance seven-year debt in the TLB market for 300 basis points over Libor, compared with typical three-year leverage loan refinancing starting at 350 basis points over BBSY – Australia’s bank bill bid swap rate.

The term loan B market is similar to the sub-investment grade or “junk” bond market in that it offers riskier borrowers long-term funding.

“It maybe attractive for companies going through restructure or a growth change programme to lock in funding on set terms which can take the business through challenging times,” said Chris Champion, head of leverage finance at Goldman Sachs in Australia.

Cinema operator Hoyts, owned by Australia’s Pacific Equity Partners, and packaging firm Pact Group, owned by New Zealand tycoon Graham Hart, have this week successfully priced debut issues after cutting the margin.

“Market conditions in the U.S. are very strong at the moment, and certain issuers can achieve more aggressive pricing,” said Andrew Ashman, director Asia-Pacific loan syndicate at Barclays in Singapore.

The foreign exchange risk is key for borrowers who do not have U.S. dollar revenues to hedge the debt repayment.

“The market is a legitimate alternative for Australian issuers, but you need to be aware of the cost involved in breaking the foreign exchange swaps for operational or company reasons,” said Alistair Dick, head of debt advisory and restructuring, Rothschild Australia.

The post Reuters – Alinta Plans Debt Raising in US appeared first on peHUB.

Oaktree Capital LLC, the world’s largest distressed debt investor, said its two founders could each receive as much as $79.9 million in a secondary offering of its shares if the firm clears net proceeds of $367.6 million, Reuters is reporting.

(Reuters) – Oaktree Capital LLC, the world’s largest distressed debt investor, said its two founders could each receive as much as $79.9 million in a secondary offering of its shares if the firm clears net proceeds of $367.6 million.

In a regulatory filing late on Monday, Oaktree said its chairman Howard Marks and president Bruce Karsh, which founded the firm in 1995, would each cut their stake from 14.4 percent to a minimum of 13.4 percent.

The sale, to be priced late on Wednesday could earn the founders more than Oaktree’s $380.3 million initial public offering in 2012, which was downsized on weak investor demand. Oaktree’s shares have since rallied more than 30 percent, making cashing out more attractive.

A portion of how much fund managers make, as well as their long-term commitment to the firm, hinges on their ownership. Investors’ interests are best aligned when both sides make a lot of money when deals work out, so getting money by cashing out, even in part, can be a sensitive issue among some fund investors, who pay attention to how much managers earn and how they are remunerated.

Depending on whether the underwriters exercise in full their option to purchase shares in the offering, this could raise between $69.5 million and $79.9 million for each of the two founders, Oaktree said. Marks and Karsh earned $72.5 million apiece in the firm’s IPO in April 2012, when they each cut their stakes from 15.6 percent to 14.4 percent.

Oaktree said it is basing their potential reward on an offering price of $54.72 per share. Oaktree shares ended trading at $55.62 on Tuesday, down 0.5 percent.
Marks, 67, and Karsh, 57, were worth $1.7 billion each as of March 2013, according to Forbes. Other Oaktree insiders have also registered to sell shares in the secondary offering.

Oaktree had $78.8 billion in assets under management as of the end of March, including money from 75 of the 100 largest U.S. pension plans, 400 corporations, ten sovereign wealth funds and more than 300 universities, endowments and charities.

The firm invests in distressed debt, senior loans, high-yield bonds, private equity, convertible securities, real estate and listed equities.

Earlier this month, Marc Rowan and Joshua Harris, who together with Leon Black founded Oaktree rival Apollo Global Management LLC (APO.N: Quote, Profile, Research, Stock Buzz) in 1990, grossed $110.6 million and $55.3 million respectively in a secondary offering of shares.

Morgan Stanley, Bank of America Merrill Lynch and Credit Suisse are acting as joint global coordinators and Goldman Sachs & Co, JPMorgan and Wells Fargo Securities are acting as joint bookrunners for Oaktree’s secondary offering.

The post Oaktree Founders Could Reap Up to $80 million Each in Stock Sale appeared first on peHUB.

Former top commodities traders from Deutsche Bank are in talks with U.S. private equity group Riverstone to set up a $0.5-1.0 billion venture that will both invest and trade in commodities, Reuters is reporting.

(Reuters) – Former top commodities traders from Deutsche Bank are in talks with U.S. private equity group Riverstone to set up a $0.5-1.0 billion venture that will both invest and trade in commodities.
The venture, which will put money into assets ranging from energy producers to pipelines and refineries, is a rare foray by a private equity firm into commodities at a time when banks are curbing exposure due to tighter regulations and stagnant prices.
Riverstone, an energy and power-focused private investment firm with around $24 billion of capital raised across seven investment funds, will hold a controlling stake in the venture, TrailStone, to be launched later this year.
David Silbert, who led Deutsche’s commodities trading team from 2007 before leaving last year as the bank reduced exposure to commodities, will also be investing in TrailStone together with his partners, Silbert told Reuters.

“TrailStone will be an asset-backed commodities merchant. We will buy refineries and production assets, create joint ventures with people who have assets,” Silbert said.

“There are loads of upstream producers who need capital. We will be telling them – pay us back in production not cash.”
Riverstone declined to comment on the investment.

Silbert had helped build Deutsche into one of the largest commodities players in banking before the German lender reduced exposure for reasons including tougher regulations on proprietary trading.

Hedge funds have also recently reduced exposure to commodities due to poor returns, giving a large market share to unregulated Swiss trading houses.

“We will be different from a hedge fund. Our model won’t be very much different from trading companies, which have been generally good at acquiring assets,” said Silbert.

“But we will be fairly risk averse. There will be no emphasis on proprietary trading,” he added.

He said the company would invest in assets across all continents and have offices in the United States, Britain and Australia.
“The venture will be energy-focused but precious and base metals, iron ore and coal will be also big for us. We will be focusing on investing in mid-sized companies with quality assets,” he said.

Once the venture is running, it could partner with other private equity funds or offer them help in running assets or trading commodities.

Silbert’s partners at TrailStone will be Troy Martin, previously chief operating officer of Deutsche’s commodities trading, Bill Gebhardt, who as he did at Deutsche will oversee European power and gas, John Redpath, who will look after oil and agriculture, and Raymond Key, who will oversee metals.

Silbert previously worked at Merrill Lynch and Koch Trading. Riverstone has offices in New York, London and Houston and has invested around $21.8 billion to 98 projects in North America, Latin America, Europe, Africa and Asia.

The post Private equity, top traders mull $1 bln commodity venture appeared first on peHUB.

Blackrock, the $4 trillion U.S. fund manager, has bought private equity real estate fund MGPA in a deal that boosts its presence in Asia and continental Europe, Reuters is reporting.

(Reuters) – Blackrock, the $4 trillion U.S. fund manager, has bought private equity real estate fund MGPA in a deal that boosts its presence in Asia and continental Europe.

The combined business will have $25 billion of property under management and the transaction is due to complete later this year. No price was announced.

The real estate fund management industry has been under pressure since the financial crash and larger funds find it easier to raise money, attract high-quality staff and benefit from the efficiencies of scale to deliver the high returns demanded by investors.

The post Blackrock Buys MGPA to Create $25 Bln Real Estate Fund appeared first on peHUB.

Seven West Media Ltd, owner of Australia’s top-rated free-to-air television network, said on Tuesday that its major shareholder private equity firm KKR & Co had sold its entire A$260 million stake in the company, Reuters is reporting.

(Reuters) – Seven West Media Ltd,  owner of Australia’s top-rated free-to-air television network, said on Tuesday that its major shareholder private equity firm KKR & Co had sold its entire A$260 million stake in the company.

Kohlberg Kravis Roberts & Co advised Seven West Media of its decision to sell its 12 percent stake following the close of the market on the Australian Securities Exchange, with brokers Goldman Sachs and Deutsche Bank taking orders for the stock.

“We will welcome our new shareholders following completion of KKR’s sale of its shares,” said Seven West Media Chairman Kerry Stokes in a statement.

Stokes blamed funding pressures on KKR bought about by a high Australian dollar and the fact that KKR had been unable to dispose of its shares following Seven West’s appointment of television division head Tim Worner as chief executive.

KKR spokesman Justin Reizes said the sale decision was driven by a range of factors on which the company based its initial December 2006 investment and returns sought over a planned 5-7 year stake in Australia’s most watched network.

Over the past year Seven West has been on a cost-cutting drive aimed at offsetting weaker revenues from advertising in Australia’s flagging economy and as it adapts to strong competition in the media sector from online and cable content competitors.

Shares in Seven West Media closed at A$2.28, down 3.39 percent. Bids for KKR’s holding were starting at A$2.21.
Seven West Media went public in 2011 through a merger with West Australian Newspapers. The group is 33 percent owned by Seven Group Holdings (SVW.AX: Quote, Profile, Research, Stock Buzz), controlled by Stokes.

In addition to the Seven Television network, Seven West also owns The West Australian newspaper, 50 percent of web site Yahoo!7, and the country’s second-largest magazine group, Pacific Magazines.

The post KKR Sells Entire Stake in Australia’s Seven West Media appeared first on peHUB.

Specialty chemicals producer Rockwood Holdings Inc’s pigments businesses have attracted offers from buyout firms including Blackstone Group LP and Advent International Corp, several sources told peHUB.

NEW YORK (Reuters) – Specialty chemicals producer Rockwood Holdings Inc’s (ROC.N: Quote, Profile, Research, Stock Buzz) pigments businesses have attracted offers from buyout firms including Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz) and Advent International Corp, several people familiar with the matter said.

The auction for the assets, in which Apollo Global Management LLC (APO.N: Quote, Profile, Research, Stock Buzz), Bain Capital LLC, Golden Gate Capital LLC and Rhone Group LLC are also participating, is now in its second round, with meetings with management taking place, the people said.

The sources spoke on the condition of anonymity because the process is confidential. Some of the persons spoke on Monday and others spoke in recent days.

Rockwood has packaged its Sachtleben titanium dioxide unit with its color additives units and is hoping to sell or spin off the businesses by the end of the year. Rockwood previously tried to sell just Sachtleben, which yielded little interest, people familiar with the matter told Reuters earlier this year.

Combined earnings before interest, taxes, depreciation and amortization (EBITDA) at the businesses was around $300 million in 2012, three of the sources said. The assets could fetch between $1.5 billion and $2 billion, they added.

Sachtleben’s EBITDA has dipped in 2013. While the company has said it believes the business has hit the bottom of an earnings trough, some private equity buyers are not convinced about the rebound, sources said. One source said that EBITDA for the combined businesses for the 12 months ending in June is around $200 million.

The business could bring in five to seven times forward EBITDA, the sources said.

Rockwood, Blackstone, Apollo, Advent, Golden Gate and Bain declined to comment. Rhone did not respond to a request for comment.

Titanium dioxide particles reflect light, creating the whiteness in paints and car coatings. Their products are also used to protect wood or plastic surfaces from bleaching out, as sunblock in skin cream, and to take the shine out of synthetic fibres.

The titanium dioxide industry – whose largest players include Dupont (DD.N: Quote, Profile, Research, Stock Buzz), Saudi Arabia’s Cristal Global, Tronox Ltd (TROX.N: Quote, Profile, Research, Stock Buzz) and Huntsman Corp (HUN.N: Quote, Profile, Research, Stock Buzz) – has been on a roller-coaster ride in recent years.

Huntsman is also exploring options for its titanium dioxide business.

Producers slashed capacity in 2009 during the economic crisis, only to see demand rebound and product prices soar in 2010 and 2011, driven by automotive demand. As idled plants came back on stream, prices came under pressure again in 2012.

The performance additives unit produces color pigments which are sold to firms making paint and clay additives which can be used to improve the characteristics of building materials.

Home construction has begun its recovery from a rut that preceded the worst recession since the Great Depression, adding to U.S. economic growth last year for the first time since 2005.

Rockwood has also put Germany-based CeramTec up for sale and is reviewing bids by private equity firms Bain Capital, BC Partners and Cinven. CeramTec has a price tag of around 1.4 billion euros ($1.80 billion), people familiar with the matter said.

The post Rockwood Pigments Businesses Attract Private Equity Bids: Sources appeared first on peHUB.

Dell Inc said in a letter to suitors Carl Icahn and Southeastern Asset Management that the company would not provide more information about itself unless the board determined that their proposal was “superior” to founder Michael Dell’s, Reuters is reporting.

(Reuters) – Dell Inc said in a letter to suitors Carl Icahn and Southeastern Asset Management that the company would not provide more information about itself unless the board determined that their proposal was “superior” to founder Michael Dell’s.

Earlier this month, Icahn and Southeastern offered $12 in cash per share or additional shares to existing investors as an alternative to Michael Dell’s $24.4 billion bid to take the company private.

Dell’s special committee of the board of directors said in a letter on Monday that Icahn’s affiliates and representatives had made a number of requests for information, including a request for data room access for a potential lender.

“Please understand that unless we receive information that is responsive to our May 13 letter, we are not in a position to evaluate whether your proposal meets that standard,” the special committee said.

The committee had on May 13 asked Icahn and his ally Southeastern for more details on their proposed offer.

It had said it was not clear Icahn intended to make “an actual acquisition proposal that the Board could evaluate” or if he intended his offer as an alternative in the event the pending sale to Silver Lake and Michael Dell is not approved.

Dell reported a 79 percent slide in quarterly profit last week as personal computer sales continued to shrink.

The post Dell Says Cannot Disclose More Information to Icahn Yet appeared first on peHUB.

Blackstone Group LP is planning to create a hedge fund which will consist of the boldest trades from the third-party hedge funds it invests with, the Financial Times reported.

(Reuters) – Blackstone Group LP is planning to create a hedge fund which will consist of the boldest trades from the third-party hedge funds it invests with, the Financial Times reported.

The new fund will invite managers to sell their interesting trading ideas in exchange for a fee and it will be run by former Duquesne Capital partner, Greg Geiling, the daily said.

The business paper said that Blackstone was already running the fund quietly for several months, inviting investments from its biggest institutional clients.

Blackstone was not available for comment outside usual U.S. business hours.

The post Blackstone Planning to Create New Hedge Fund – FT appeared first on peHUB.

Private equity group HgCapital has put on ice a sale of Schleich, the German company that makes high-quality miniature animal figures and Smurfs toys, sources told Reuters.

(Reuters) – Private equity group HgCapital has put on ice a sale of Schleich, the German company that makes high-quality miniature animal figures and Smurfs toys, three people familiar with the matter said.

The people close to the sale process said that HgCapital’s price expectations had been too high.

HgCapital had hoped to get 200 million euros ($257 million), a valuation above that of Schleich’s larger rivals, while bidders had offered about 160 million euros, one of the people said.

“Schleich has developed well and the question is when will buyers acknowledge that adequately,” a person close to HgCapital said, adding no specific time had been set for a possible relaunch of the sale.

HgCapital had appointed Goldman Sachs in October to look for a buyer. HgCapital, Schleich and Goldman Sachs declined to comment.

The private equity group bought Schleich, based in Schwaebisch-Gmuend in Germany, in 2006, at an enterprise value of 165 million euros.

The company, founded in 1935 by Friedrich Schleich, started out as a maker of plastic components. In the 1950s it introduced its range of Schleich figurines, that now includes Smurfs, Snoopy, The Muppet Show characters as well as dinosaurs, domestic and wild animals.

It employs 350 staff and has annual sales of roughly 100 million euros.

Rival toymakers Mattel and Hasbro trade at 8.7 and 10.5 times earnings before interest, taxes, depreciation and amortisation (EBIDA), respectively.

Schleich in 2012 saw core profit or EBITDA fall to 18 million euros missing a 30 million euro target, as the company struggled with a revamp of its sales force.

“We see encouraging trading activity in the new year as sales force productivity improves,” HgCapital said in its 2012 annual report.

The post HgCapital Pulls Sale of Smurf Maker Schleich – Sources appeared first on peHUB.

British buy-out firm 3i has agreed to work closely with major investment partners to buy into companies together, sidestepping the need to raise new funding in the short term, Reuters is reporting.

(Reuters) – British buy-out firm 3i has agreed to work closely with major investment partners to buy into companies together, sidestepping the need to raise new funding in the short term.

3i, which owns fashion retailer Hobbs and Tommee Tippee baby bottle maker Mayborn, has been on a drive to reboot its flagging fortunes after shareholder frustration at weak results from its buyout business, together with a poor share price performance, forced a change in chief executive last year.

Announcing 3i had far exceeded its cost-savings goal for the year, Chief Executive Simon Borrows said the company had agreements with both a large sovereign wealth fund and a major UK institution.

“They are in place and there may be more to add to that. Those people will be at the front of the queue in terms of co-investing with us,” Borrows told reporters. “They will have the right to say whether they want to be in a particular deal.”

Borrows, a former investment banker who was previously 3i’s investment head, replaced Michael Queen a year ago, charged with turning around a business hit by a series of poor deals in recession-hit European markets.

The CEO also has activist investor Edward Bramson’s Sherborne Investors to contend with. Sherborne recently revealed it had raised its stake in 3i to 4.9 percent and described it as a “target company”.

Since the financial crisis, big institutional investors have been putting less money into private equity and becoming pickier about the firms they back. Many private equity firms have had to scale back fundraising plans, in contrast to the pre-crisis boom years when they easily beat their targets.

Private equity funds in Europe raised nearly $52 billion in 2012 compared with an annual average of more than $100 billion during the 2006-2008 boom.

3i last raised a pan-European fund in 2006.

COST SAVINGS
Reporting its results for the year to March 31, 3i said it had exceeded its 40 million pound cost savings target by 28 percent and would now increase that target to 60 million pounds by the end of March next year.
It has also already met its target of reducing gross debt below 1 billion pounds by June.

Over the last year it has cut 168 staff, or 39 percent of total headcount, and closed six offices around the world.

Its recent woes stem from its having invested heavily in companies during the peak of the buy-out market in the mid 2000s in mature regions or declining western European markets such as Britain and Spain.

3i, which was set up after World War Two to help with the reconstruction of British industry, has moved away from just private equity, aiming to balance this better with its infrastructure and debt-management businesses.
Shares in the company, which have doubled since Borrows took over a year ago, were down 5.6 percent at 343 pence by 1025 GMT.

JP Morgan analyst Christopher Brown said Bramson was the big unknown in 3i’s future. “It remains unclear whether it will take its considerable profits and move on or whether it will aim to appoint its representatives to the board,” he said in a note.

“Given the progress made since Simon Borrows took over, the strong share price performance and the additional cost savings, profit-taking by Sherborne is looking increasingly likely.”

Borrows said 3i had not had any communication with Bramson.

“We are clueless as to what he is up to,” he said.

3i’s diluted net asset value per share, a key measure for valuing its portfolio, was up 11.5 percent on the year at 311p.

The company has made a series of disposals, including of plastic equipment maker Mold Masters. These private equity exits generated proceeds of 575 million pounds over the year, down from 770 million a year earlier.

The post UK’s 3i Seeks Investment Partners in Recovery Plan appeared first on peHUB.

Bain Capital LLC has emerged as the last party standing in the race for Yankee Candle Co Inc, three people familiar with the matter said, making it likely that the largest scented candle maker in the United States will stay in private equity hands, Reuters reported.

(Reuters) – Bain Capital LLC has emerged as the last party standing in the race for Yankee Candle Co Inc, three people familiar with the matter said, making it likely that the largest scented candle maker in the United States will stay in private equity hands.

Final bids for Yankee Candle, currently owned by Madison Dearborn Partners LLC, are due this week and the people said on Wednesday that other buyout firms that had made first-round offers for the company, including Advent International Corp, CVC Capital Partners Ltd, Clayton, Dubilier & Rice LLC and Ares Management LLC, had lost interest.

As a result, Yankee Candle would be unlikely to fetch more than $2 billion, said the people, who spoke on condition of anonymity because the process is confidential. Madison Dearborn may decide not to sell the company for now, they added.

Yankee Candle declined to comment while representatives of the private equity firms did not immediately respond to requests for comment.

Founded in 1969, Yankee Candle sells items including scented candles, home fragrance products, car fresheners and candle accessories. Its candles are sold in North America through a wholesale network of about 35,000 store locations and 558 stores of its own, as well as online and through its catalog.

The South Deerfield, Massachusetts-based company generated net income of $56.3 million for fiscal 2012, up from $54.5 million in the prior year. It had long-term debt of $846 million and just $40 million in cash as of the end of 2012.

Yankee Candle’s modest earnings growth was cited by the people familiar with the matter as one of the reasons for the auction fizzling out. The candle manufacturer may be worth 10 times its earnings before interest, tax, depreciation and amortization of around $200 million, sources previously told Reuters.

Chicago-based Madison Dearborn acquired Yankee Candle in 2006 for $1.6 billion. In its talks with Yankee Candle, Bain Capital is now dealing with an old acquaintance.

Yankee Candle’s chief executive, Harlan Kent, who last year appeared on the U.S. reality TV show ‘Undercover Boss’ as a Yankee Candle employee in disguise, began his career in the mid-1980s at Bain & Co, the consulting firm whose partners, including former U.S. presidential candidate Mitt Romney, founded private equity firm Bain Capital in 1984.

Kent later worked for Bain Capital from 1997 to 2001 as senior vice president of global wholesale for umbrella maker Totes Isotoner Corp, which at the time was a Bain Capital portfolio company. He joined Yankee Candle in 2001 as senior vice president of the wholesale division and rose through the ranks to become CEO in 2009.

Madison Dearborn hired Barclays Capital (BARC.L: Quote, Profile, Research, Stock Buzz) and Bank of America Merrill Lynch (BAC.N: Quote, Profile, Research, Stock Buzz) to explore a sale of Yankee Candle, people familiar with the matter told Reuters in March.

The post Bain in the Lead as Yankee Candle Sale Fizzles – Sources appeared first on peHUB.

Alternative asset managers such as Blackstone Group and KKR have for decades scoured the stock market for undervalued companies, writes Reuters. Now they are trying to convince investors that shares in their own firms are a bargain.

Reuters – Alternative asset managers such as Blackstone Group LP (BX.N) and KKR & Co LP (KKR.N) have for decades scoured the stock market for undervalued companies. Now they are trying to convince investors that shares in their own firms are a bargain.

As a group, their valuations tend to be weighed down by at least three factors. Because they have gone public relatively recently, their track record as public companies is relatively short. The presentation of their results is complicated and makes comparisons difficult. What is more, their founders and partners have retained significant stakes, which can be negative for their stock when investors fear a significant share sale.

Even so, shares of these firms – a list that also includes Carlyle Group LP (CG.O) and Apollo Global Management LLC (APO.N) – are unlikely to stay cheap for long, analysts say.

If these firms can keep generating strong results, turning profits from asset sales and paying out more in dividends, stock market investors are bound to pile in, they say.

“We believe the valuation gap with the traditional asset managers will converge, if not reverse, over time,” Credit Suisse analyst Howard Chen said. “The alternative asset managers are still a very young sector for public market investors.”

Even after a rally that boosted shares of the group by 40 to 110 percent in the last 12 months, alternative asset managers still trade at a big discount to traditional money managers.

Blackstone, the largest alternative asset manager, went public in 2007. It trades at close to nine times its 12-month projected earnings. That’s a steep discount to a peer group that includes traditional asset managers, which trades at almost 15 times, according to data compiled by Thomson Reuters.

The valuation gap is particularly glaring because Blackstone has a dividend yield of 4.5 percent. By comparison, the peer group on average has a 2 percent dividend yield.

To underscore the point, Blackrock Inc (BLK.N), the largest traditional asset manager, has a dividend yield of 2.2 percent while trading at 16.8 times its forward 12-month earnings.

At Blackstone’s annual investor day in New York earlier this month, Stephen Schwarzman, chief executive and co-founder, said: “One day you are gonna wake up as an investor … You are gonna say ‘nine?’ (of the firm’s price-to-earnings multiple) – “Who came up with nine?”

In Blackstone, he said, “You’ve got the best returns, basically, in the world. You’ve got growth that is hundreds of percent higher than companies that are valued at double the multiple.”

Alternative asset managers focus on asset classes such as private equity, real estate, corporate credit and hedge funds, and some of them lock up client money for 10 years or more.

Traditional asset managers such as Blackrock invest mainly in stocks and bonds, and their clients can generally take their money out much more easily.

With interest rates at record lows, both traditional and alternative asset managers have benefited from the pursuit of higher yield by investors.

Firms such as Blackrock, which was founded with help from Blackstone in 1988 but severed ties in 1995, has seen a surge of fund investors moving into stocks.

By the same token, alternative asset managers have enjoyed a boost from large institutional investors such as pension funds and insurance firms looking to beat the stock market and make more than two times their money on investments.

UNORTHODOX METRICS

KKR, Apollo and Carlyle, which went public in 2009, 2011 and 2012 respectively, also trade at a significant discount to the traditional money managers.

Blackstone and its peers sponsor funds that buy or invest in assets such as companies, single-family homes, distressed loans, and hedge funds. They hold them, work to increase their value and then sell them, often at a big profit.

Because some of the funds have a lifespan of 10 years or more, their assets may have been on their books since the firms went public. Although investors have updated estimates of their values, the eventual sale price may differ.

“The investment community still has not seen a full cycle for these firms, and specifically, active harvesting and distribution payout,” Credit Suisse’s Chen said.

The complexity of the earnings is also an issue, Chen said. To show their earnings potential, alternative asset managers use metrics that are not recognized under standard U.S. accounting principles. Economic net income, for example, figures prominently in their quarterly reports and reflects the estimated market value of their assets.

A second unorthodox metric is fee-related earnings. It shows how much money is generated from fees other than the so-called carried interest, the fund manager’s slice of the investment profits.

To make matters more complicated, there is no uniform calculation of these metrics. Unlike Blackstone and Carlyle, KKR includes discretionary compensation and incentive fees in its fee-related earnings. Apollo uses a different metric called management business ENI, instead of fee-related earnings.

These are just a few of the discrepancies that make it more difficult for investors to make apples-to-apples comparisons. As time goes by, however, investors are becoming increasingly educated about these differences.

Representatives of Blackstone, KKR, Apollo, Carlyle and Blackrock declined to comment for this story.

SUSTAINABLE DIVIDEND YIELD?

A third obstacle to higher valuations for alternative asset managers is the relatively small percentage of their shares that trades in the stock market. Founders and senior partners own large stakes, and that can be a drag on the stock when some of them decide to cash out, even partially.

Apollo shares, for instance, slumped more than 7 percent last week after two of its founders sold a fraction of their shares.

“The market for these names will increase over time. Lowering the insider ownership and having a bigger float and not having as many insiders over the long haul will make them more investable,” Goldman Sachs analyst Marc Irizarry said.

Irizarry also cautioned that once these firms have exited from a lot of the lucrative assets that they hold, the sustainability of their dividend yield may come into question, at least until they have more profitable investments to harvest. This means that the value of their shares will not always be on the rise.

Said Irizarry, “If all the low-hanging fruit has been picked, then the value of the stocks might not be what it is today.”

(Reporting by Greg Roumeliotis in New York; Editing by Soyoung Kim, Frank McGurty and Prudence Crowther)

The post Reuters – Blackstone and Peers Promote Bargain Shares appeared first on peHUB.

General Lighting Co, a Saudi Arabian company part-owned by Carlyle Group, plans to sell its shares on the Saudi stock market, paving the way for the private equity firm to exit its stake, Reuters is reporting.

(Reuters) – General Lighting Co, a Saudi Arabian company part-owned by Carlyle Group, plans to sell its shares on the Saudi stock market, paving the way for the private equity firm to exit its stake, two sources said.

General Lighting is the largest lighting company in Saudi Arabia and Carlyle acquired its 30 percent stake in the firm for an undisclosed amount in March 2010.

Washington D.C.-based Carlyle, which had assets under management of $176 billion at the end of March, has hired Riyadh-based GIB Capital and law firm Latham & Watkins to help arrange the initial public offering (IPO), the sources said, speaking on condition of anonymity as the matter is not public.

Saudi Arabia is the largest Gulf Arab stock market and the only bourse in the region where initial share sales have been active in the last few years.

Companies in Saudi Arabia generally offer 30 percent of their capital in IPO. A spokeswoman for Carlyle in London declined to comment. Dow Jones newswire reported the IPO filing plan earlier in the day.

Carlyle raised $500 million in 2007 for its debut fund in the region. The fund now has stakes in six companies in its portfolio, including Turkish lingerie and swim wear maker Penti and Jordanian firm Nabil Foods, which the firm bought in May.

It has not exited any of its investments in the region so far. Carlyle owns a 40-percent stake in Turkish hospitals group Medical Park and London-based private equity fund Pamplona Capital Management is in exclusive talks to buy a majority stake in the firm, a source close to the matter told Reuters in April.

The post Carlyle-backed General Lighting Plans Saudi Share Sale-Sources appeared first on peHUB.

Partnership Assurance Group is to float on the London Stock Exchange, writes Reuters. Owned by private equity firm Cinven since 2008, the life insurer generated profit of 112 million pounds ($171.97 million)in 2012 and claims a 26 percent share of the 4.5 billion pound non-standard annuities market in Britain.

Reuters – Partnership Assurance Group, the private-equity backed life insurer, announced plans on Monday to float on the London Stock Exchange, in a further sign that London’s initial public offering market is rebounding.

Owned by private equity firm Cinven since 2008, the life insurer generated profit of 112 million pounds ($171.97 million)in 2012 and claims a 26 percent share of the 4.5 billion pound non-standard annuities market in Britain.

Cinven plans to sell a portion of its existing shares as well as issue new shares to raise approximately 120 million pounds to achieve a minimum free float of 25 percent.

Bank of America Merrill Lynch and Morgan Stanley have been appointed as joint sponsors and joint global co-ordinaters with Keefe Bruyette & Woods and Panmure Gordon & Co acting as co-lead managers. Evercore is financial adviser to the company.

The post Reuters – Partnership Assurance Group London Float appeared first on peHUB.

Investment firm Ares Management is to acquire AREA Property Partners, gaining the New York-based real estate investor’s US$6 billion in assets, the Wall Street Journal reported, citing people briefed on the matter, writes Reuters. Terms of the transaction were not disclosed but Ares, a Los Angeles-based investment firm with about $60 billion under management, will also buy out a minority stake in AREA held by the National Australia Bank.

Reuters – Investment firm Ares Management will acquire AREA Property Partners, gaining the New York-based real estate investor’s US$6 billion in assets, the Wall Street Journal reported, citing people briefed on the matter.
Terms of the transaction were not disclosed but Ares, a Los Angeles-based investment firm with about $60 billion under management, will also buy out a minority stake in AREA held by the National Australia Bank , the newspaper reported.
Ares has $2 billion in property assets, mostly debt. AREA’s $6 billion are mainly real estate equity investments in North America and Europe, it said. (http://link.reuters.com/tud97t)
Private equity firms like Blackstone Group LP have been investing in real estate as U.S. property prices have been rising over the past four years.
Tony Ressler, one of the founders of Ares declined to comment to the Journal. Lee Neibart, AREA’s chief executive, could not be reached for comment, the paper said.
Ressler and AREA could not be reached for comment by Reuters outside of regular U.S. business hours.

The post Reuters – Ares Management to Acquire AREA Property Partners appeared first on peHUB.

Alibaba Group, China’s largest e-commerce firm, will take a 28 percent stake in digital mapping company AutoNavi Holdings Ltd, part of Alibaba’s move to boost its competitveness by beefing up its product lineup, Reuters wrote. Unlisted Alibaba will invest $294 million to become the largest shareholder in the Chinese-based firm, according to a statement from AutoNavi on Friday which confirmed an earlier report from news portal Sina. The move comes after Alibaba, which competes with Tencent Holidings, acquired an 18 percent stake in Sina Corp’s microblogging service Weibo, the Chinese equivalent of Twitter, at the end of April.

(Reuters) – Alibaba Group, China’s largest e-commerce firm, will take a 28 percent stake in digital mapping company AutoNavi Holdings Ltd, part of Alibaba’s move to boost its competitveness by beefing up its product lineup.

Unlisted Alibaba will invest $294 million to become the largest shareholder in the Chinese-based firm, according to a statement from AutoNavi on Friday which confirmed an earlier report from news portal Sina.

The move comes after Alibaba, which competes with Tencent Holidings, acquired an 18 percent stake in Sina Corp’s microblogging service Weibo, the Chinese equivalent of Twitter, at the end of April.

Industry watchers widely expect Alibaba – whose founder Jack Ma steps down as chief executive on Friday – to seek an initial public offering, possibly this year. Some say the company could fetch a valuation as high as Facebook Inc’s $100 billion.

Shares in AutoNavi have risen more than 30 percent since the start of May and stand at $14.77 per share.

Alibaba runs Taobao Marketplace, China’s largest consumer-focused e-commerce website; business-to-business commerce platform Alibaba.com; and Alipay, a PayPal-like online payment platform.

(Reporting by Adam Jourdan, Melanie Lee and Samuel Shen; Writing by Adam Jourdan; Editing by Chris Gallagher)

The post Reuters – Alibaba Takes Stake in AutoNavi Holdings appeared first on peHUB.

The owners of Finnish mobile phone operator DNA and financial adviser UBS have launched a sale of the company which could be worth more than 1 billion euros ($1.3 billion), Reuters reported, citing three people familiar with the matter. Swiss bank UBS this week sent out information memorandums to prospective buyers, the people said. The sources declined to be identified because the process is private. One of the people said Swedish buyout firms EQT and Nordic Capital were likely to bid for the number three-ranked operator.

(Reuters) – The owners of Finnish mobile phone operator DNA and financial adviser UBS have launched a sale of the company which could be worth more than 1 billion euros ($1.3 billion), three people familiar with the matter said on Friday.

Swiss bank UBS this week sent out information memorandums to prospective buyers, the people said. The sources declined to be identified because the process is private.

One of the people said Swedish buyout firms EQT and Nordic Capital were likely to bid for the number three-ranked operator.

DNA had earnings before interest, tax, depreciation and amortization (EBITDA) of 191 million euros in 2012 on revenues of 769 million. In the first quarter of 2013, revenues were flat versus the same period last year while profits rose.

The Finnish mobile services market is the centre of fierce price competition and DNA’s larger rival Elisa in April reported falling revenue and profit and cut its earnings outlook for 2013.

Sweden’s Teliasonera also saw falling revenue and profit in its Finnish business in the quarter.

Elisa is valued at 6.5 times its EBITDA profit in the 12 months to March this year. Applying the same multiple to DNA would give it an enterprise value of 1.3 billion euros.

DNA is controlled by companies that were previously local phone carriers in Finland. The largest shareholder is Finda Group, which owns close to 33 percent.

One of the people said a listing for up to half of DNA shares on the Helsinki stock exchange, allowing owners to sell part of their holdings and take part in any additional upside to the business, was also an option.

DNA and Finda declined to comment. A UBS spokesperson did not immediately return a request for comment. ($1 = 0.7637 euros) (Reporting by Sven Nordenstam; writing by Niklas Pollard; Editing by David Cowell)

The post Reuters – Owners Seek $1.3B for Finnish Mobile Co. DNA appeared first on peHUB.

Bob Geldof’s 8 Miles African private equity fund has made its first investment, backing a start-up company that plans to build commodity exchanges across Africa and improve food security, Reuters reported. The rock star activist’s $200 million fund has joined Morgan Stanley and the International Finance Corporation, in providing a total of $5 million of seed capital in eleni LLC, co-founded by Eleni Gabre-Madhin, the former head of the Ethiopia Commodity Exchange.

(Reuters) – Bob Geldof’s 8 Miles African private equity fund has made its first investment, backing a start-up company that plans to build commodity exchanges across Africa and improve food security.

The rock star activist’s $200 million fund has joined Morgan Stanley and the International Finance Corporation (IFC), in providing a total of $5 million of seed capital in eleni LLC, co-founded by Eleni Gabre-Madhin, the former head of the Ethiopia Commodity Exchange (ECX).

Gabre-Madhin set up Kenya-based eleni in January with the intention of levelling the playing field for African farmers in need of greater price transparency as they contend with powerful and better-informed market participants.

“We have closed (an agreement) this week with the 8 Miles fund,” she told Reuters on Friday at the World Economic Forum on Africa.

Gabre-Madhin aims to challenge the dominance of the world’s commodity markets by exchanges based in developed nations.

“It’s time the world looked to our markets as a reference,” she said. “There’s no reason why we shouldn’t have a west African cotton index that the world refers to, or an east African coffee index or African sesame seed index.”

Africa is on the cusp of an agricultural revolution, Gabre-Madhin added, with only a quarter of its yield potential achieved and 70 percent of arable land uncultivated.

To fulfil its potential in agriculture, Africa also needs to have structured trade, she said.

WIDELY PRAISED

Gabre-Madhin was widely praised for her work at ECX, which she co-founded and ran from 2008 to 2012. The exchange handled trades worth about $1.2 billion in 2011/12, with trading volume having risen to 601,000 tons from 138,000 tons in 2008/09.

ECX trades coffee, maize, sesame and white pea beans through an open outcry system.

Nairobi-based eleni aims to design, build and support similar exchanges elsewhere in Africa, Gabre-Madhin said.

“The Ethiopian experience is a scratch on the surface of what we’re going to do with Africa,” she said.

Gabre-Madhin wants to solve the problem of weak markets in African agriculture “by creating markets that take commodities from where they are produced and enable buyers to know how to get their hands on that commodity in a reliable, transparent, efficient way”.

While at ECX, 18 different African governments approached Gabre-Madhin about replicating the Ethiopian model, which she says is a sign of the widespread acknowledgement of the need for commodity exchanges on the continent.

Eleni is looking to launch two exchange projects within six months, she said on Friday, declining to name the countries involved.

Each exchange is expected to cost between $20 million and $30 million and will be financed through a consortium of private investors.

The investments by Morgan Stanley and the IFC were announced in January, but the backing from Geldof’s 8 Miles fund could raise eleni’s profile further as it seeks to raise an additional $200 million for new exchanges over the next three years.

The 8 Miles fund declined to give details on its investment in eleni. (Editing by David Goodman)

The post Reuters – Geldof’s Africa Fund Backs Commodity Exchange Startup appeared first on peHUB.