bloggingbuyouts

While the Blackstone Group (NYSE: BX) is primarily known as a private equity firm, this actually understates things. In fact, it is a diverse global platform that spans hedge funds, corporate advisory, and real estate investments.

Actually, the real estate segment is getting bigger. This week Blackstone announced that it raised a $4.3 billion real estate fund with the main focus on opportunities in Europe. It's called the Blackstone Real Estate Partners Europe III fund (for whatever reason, these funds can be a mouthful).

The complicated legal fight over the implosion of the private equity buyout of Huntsman (NYSE: HUN) has been settled. The firm was able to get $632 million in cash and $1.1 billion in financing from Credit Suisse (NYSE: CS) and Deutsche Bank (NYSE: DB).

Basically, Huntsman claimed that these financial firms failed to uphold their responsibilities in backing the takeover from Hexion Specialty Chemicals, which was struck in July 2007 at $28 per share. Now, Huntsman is trading at $5.92, primarily because of the plunge in the global chemicals sector.

The $52 billion merger of Anheuser-Busch InBev has resulted in some nice opportunities for private equity firms. For example, KKR recently purchased a division of the firm -- Oriental Brewery Co. (the number two brewer in South Korea) -- for $1.8 billion.

Doesn't sound like a lot? Well, it is a big deal. In fact, it's the biggest private equity deal in nine months.

Over the past few years, the private equity powerhouse KKR has tried to go public. First, the firm attempted a typical public offering, but this failed because of the credit crunch. Then KKR tried to go public by using a complicated structure by purchasing another entity, KKR Private Equity Investors (KPE), which is listed on the Euronext.

Well, it looks like this plan may also be dead, according to the Financial Times, as KKR is considering an approach to purchase KPE without triggering a listing on the New York Stock Exchange.

Back in 2007 -- at the height of the private equity bubble -- the Chinese sovereign wealth fund, China Investment Corp. (CIC), agreed to invest $3 billion in Blackstone (NYSE: BX). Of course, it was a disaster. In all, the investment lost roughly two-thirds of its value.

Despite all this, it looks like CIC hasn't given up on Blackstone. In fact, according to the Wall Street Journal (subscription required), CIC is prepared to invest $500 million into a Blackstone hedge fund vehicle.

In 2005, several Chinese entrepreneurs started a milk production company, Modern Dairy. No doubt, the company realized there was a huge opportunity in China for milk (right now, the country is third in the world in terms of production).

Besides, in light of some of the contamination problems in the industry (especially last year's melamine scandal), there was a need for a better approach.

Well, this Chinese dairy has caught the attention of the mighty private equity firm KKR. This week, the firm invested $150 million in Modern Dairy, according to Bloomberg.

The Carlyle Group, which is an $85 billion private equity powerhouse, recently published its annual report. It's a sobering document.

However, there are some interesting tidbits. For example, despite the financial turmoil -- where three deals went bust -- Carlyle was still able to raise $19.9 billion. What's more, the firm invested $12.6 billion in equity last year.

What about the future? Well, Carlyle's co-founder, David Rubenstein, who gave a presentation at the Aspen Global Leadership Network conference, offered some insight on what's ahead, as reported by BusinessWeek.

Not long ago, the private equity firm, Fortress Investment Group LLC (NYSE: FIG), appeared to be in deep trouble. But things are looking better now, as the stock price has gone from $1 to $4.65 this year.

In fact, Fortress is now pulling the trigger on some deals. Just this week, the firm teamed up with Crestview Partners LP and Lightyear Capital LLC to invest $450 million in First Southern Bancorp (Lightyear is operated by Donald Marron, who was the former chief of PaineWebber Group).

OpenTable, which plans to launch its IPO this week, announced that the price range on the offering has gone from $12-$14 to $16-$18. In other words, there's quite a bit of investor interest in the deal. In all, the company plans to issue three million shares (about half of which will be sold by insiders of the company).

OpenTable operates an online network that manages reservations for restaurants. Some of the functions include table management, guest recognition, and e-mail marketing.

Founded ten years ago, OpenTable has been able to build a customer base of roughly 10,000 restaurants (processing three million diners per month). Keep in mind that there are 30,000 reservation-taking restaurants in North America.

In the middle of 2007, the private equity industry started to crumble as the credit crunch shocked the U.S. financial system. Since then, it's been particularly tough for deal makers.

Yet, according to a cover article in BusinessWeek, the good days may be here again. In fact, private equity may even help the economy out of its funk.

When the Blackstone Group (NYSE: BX) reported its Q4 results, the company's CEO, Stephen Schwarzman, said that the stock price was "dimwitted." Well, since then, the stock price has surged from $4.87 to $13.44.

What happened? Perhaps it's the fact that the financial system has stabilized.

But, if you take a look at the Q1 results (announced yesterday) for Blackstone, things still look ugly. In fact, on the conference call, President Tony James gave a particularly negative view on the economy. For the most part, it looks like it will take a long while to get things back on track.

Over the past five years, TPG has raised a whopping $52.35 billion for its private equity funds, making the firm the biggest player in the space.

True, last year was particularly tough for TPG, which suffered some horrendous deals (such as the wipeout on Washington Mutual). But the firm has shown that -- over the long term -- it can find ways to morph itself and ultimately produce competitive returns.

And this time, TPG is making some interesting moves. For example, the firm is highly averse to leverage buyouts (LBOs). Essentially, this is a way to use large amounts of debt to buy a company. However, with the credit squeeze, it's hard to make these deals work.

Back in early 2007, KKR Private Equity Investors -- along with Citigroup (NYSE: C) -- invested $700 million in Sun Microsystems (NASDAQ: JAVA). The investment structure was a convertible senior note (both firms split the investment).

And, just like many other private equity deals, KKR wrote down the investment -- by about $167 million. This was as of last year.

With billions in the bank and a broad technology platform, Cisco (NASDAQ: CSCO) has been fairly clear that a big priority is M&A. And this week, we got another deal: the $105 million purchase of Tidal Software.

Tidal develops sophisticated data center software solutions -- helping to manage diverse applications, such as from Oracle (NASDAQ: ORCL), SAP (NYSE: SAP) and Microsoft (NASDAQ: MSFT).

Of course, Tidal's business is a nice complement for Cisco, which is getting aggressive in the server market.

If you want a view into the travails of the private equity industry, you can check out the shares of AP Alternative Assets, which is operated by Apollo Management. Traded on the Euronext, the price has gone from $20 in 2006 to $1.

According to a piece in this week's Barron's [a paid publication], AP Alternative Assets could be headed for even more trouble. Keep in mind that the fund focused on the frothy deals of 2006 to 2007 (although, there are some 2008 transactions). This means there are positions in ailing companies like Harrah's, Realogy, and Claire's Stores. Yikes!