bloggingbuyouts

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.

Blackstone Group co-founder Peter Peterson has elected to donate $1 billion -- which he calls the "vast majority" of his "net proceeds" from the company -- to his very own Peter G. Peterson Foundation. The foundation's mission statement on its website reads:

Our mission is to increase public awareness of the nature and urgency of key economic challenges threatening America's future and accelerate action on them. To meet these challenges successfully, we work to bring Americans together to find sensible, sustainable solutions that transcend age, party lines and ideological divides in order to achieve real results.

Senator Jack Reed, a Rhode Island Democrat and chairman of a Senate subcommittee charged with overseeing Wall Street, wants the Federal Deposit Insurance Corp. (FDIC) and other financial regulators to come up with rules for private equity firms that want to buy banks.

Reed's interest in the matter may give the FDIC an incentive to quickly fulfill a promise it made to provide "policy guidance" for such deals after seizing Florida-based BankUnited and selling it to a group of private equity funds last week in the biggest bank failure this year.

In what could be the most watched private equity deal of the year, a consortium of buyout firms led by billionaire investor Wilbur L. Ross has set its sights on BankUnited Financial Corp. (NASDAQ: BKUNA), says the Wall Street Journal (subscription required). The consortium includes Carlyle Group and Blackstone Group (NYSE: BX).

Earlier this year, federal regulators declared that the Florida-based lender was "critically undercapitalized" and demanded that it find a buyer or raise new capital. While regulators have traditionally favored other lenders in sales of banks, if Ross's group is successful, it would not only be one of the largest acquisitions in the financial-services sector made by private equity, but could also signal a shift in the government's attitude toward private-equity buyers of banks.

Leveraged buyout guru Henry Kravis, cofounder of the legendary private equity firm Kohlberg Kravis Roberts, tells Forbes that he believes private equity will come back from the hit it has taken from the financial crisis.

"It's not dead at all, but it will take different forms," he said.

Kravis compares the current economic environment to 1979, when, the U.S. economy was struggling, inflation was at 13%, unemployment at 11%, and zero financing was available. But then, of course, followed the explosion of private equity in the 1980s and 1990s.

In the rarefied world of private equity, there is a well-known PR operator: Kekst & Co Inc. Founded in 1970, the firm has a sterling client list, which includes biggies like KKR. No doubt, it's a complex specialty, which requires a strong understanding of securities regulation and shareholder relations.

Well, Kekst is selling out to Publicis Group, which is a global advertising and marketing firm. The price tag was not disclosed.

Kekst has a storied past. For example, the firm was involved in the leveraged buyout of RJR (back in the late 1980s). Kekst is also advising Anheuser-Busch Companies Inc. (NYSE: BUD) on its fight against InBev.

Carl Icahn, biggest of the big swinging activists, finally switched on his new blog. Unfortunately, his initial posts for TheIcahnReport center not on his loathing for Yahoo! Inc. (NASDAQ: YHOO), but on the more abstract fear of crummy corporate governance. The fear and loathing are linked, of course. But it appears Icahn will resist the urge to vivisect Jerry Yang in print -- at least until he has liquidated his holdings in the Internet company.

If so, that's too bad. And Carl, just think of the fun you could have!

Yahoodlums smashing innocent SHers!
posted on June 19, 2008 - 2:37 p.m.

Testing, testing. We live? Hi everyone, Carl here. Let me begin by saying what a pleasure it is to be here. But let me tell ya, that Jerry Yang. He made a killing in the stock market on this Microsoft business--he shot his broker. Yeah, I wish that nudnik would learn a trade so I'd know what kind of work he's gonna be out of. Can this guy get off my planet, already? Why, all this schmuck does is keep running his mouth--if he keeps talking maybe he'll say something intelligent.

That's it from me, folks. I'm here everyday. Try the prime rib. -- Carl Icahn

Continue reading at TechConfidential.com.

Huntsman Corp. (NYSE: HUN) is seeing the value of its stock destroyed in after-hours trading. This was one of those pending mergers that was old enough that many had forgotten it was even on the docket. Hexion Specialty Chemicals has announced that it has filed suit in Delaware to exit its contractual obligations to acquire the company.

The Hexion-led filed to terminate its proposed $10.6 Billion acquisition of Huntsman Corp. Hexion has said in this suit filed that it believes that the capital structure agreed to by both Huntsman and by Hexion for the combined company is no longer viable.

The reasons noted are because of Huntsman's increased net debt and its lower than expected earnings. Hexion notes that both companies are individually solvent but it believes that the merger's capital structure previously agreed to would render the combined company insolvent.

Keep reading at 247WallSt.com for the rest of the details and analysis.

If you are Sam Zell right now, you are probably sitting there wondering why on earth as an old billionaire that you thought an old world media property with very little in new media that you'd have to shrink and break apart to profitability was such a good idea. Tonight, that looks even more so the case.

According to MLB.com Tribune Co. rejected a no-tax proposal in the sale of Wrigley Field to the Illinois Sports facilities Authority, which also owns and operates the Chicago White Sox U.S. Cellular Field as well.

If you read the full article you'll see how this may also impact the sale of the Chicago Cubs as well. Zell announced in April 2007 that the Cubbies were to be sold. Interestingly enough, the Cubs are also in first place in the NL Central division.

Samuel Israel III founded the Bayou Hedge Fund Group in 1996. Within a few years, the hedge fund was deep in the red, and Israel and some of his associates came up with a novel way to deal with their problem: they created their own auditing firm and promptly gave themselves a clean bill of health. Making profits is easy when you cook the books, and Bayou cooked with the best of them, long and well enough to keep the criminal enterprise going for many more years.

Eventually, Israel was caught and Bayou went belly up. Some estimates put the total investor loss at more than $450 million. Last April, Israel was sentenced to 20 years in prison, and he was to begin serving that time today. But ABC News is reporting that Israel failed to show up at prison. His SUV was found near a bridge that spans the Hudson River, with the words "suicide is painless" written in the dust on the hood. But no body has been found and no one saw him jump.

Somehow, I have trouble imagining a thief of such epic proportions killing himself. Escape at all cost seems a more likely pursuit. I suspect that a careful review of all passengers getting onto planes to Buenos Aires or Bangkok today might just yield a former hedge fund manager trying to pull off one more scam.

Harris Corp. (NYSE: HRS) is recently trading around $55, down from $65.78 last week. Harris said "that from time to time it is approached by other companies with expressions of interest in various types of transactions, including a potential sale of the company. Harris stated today that it is not pursuing a merger or a sale."

HRS June option implied volatility is at 42, July at 37, near its 26-week average of 37 according to Track Data, suggesting non-directional price risk.

M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Shares of Chemtura Corporation (NYSE: CEM) are seeing some love early Tuesday. A report out of the WSJ from last night is putting the stock in play as a potential takeover target. The report notes that Blackstone Group LP (NYSE: BX) and Apollo Management LP are in talks to acquire the specialty chemical maker.

The company's market cap is almost $1.9 billion, so it would seem within the realm of deal sizes even in an environment where private equity types have not been able to do many deals. Whether or not the deal is made, that is yet to be seen.

Chemtura products are used in flame retardants, polymer additives, PVC additives, agriculture, plastics, and more.

Even on a deal this size, do we need club deals in a private equity environment in need of simplification? Either way, until we have an announcement. this should be treated as just a rumor.

Private equity firm Behrman Capital has announced that General Peter Pace, retired USMC and former Joint Chiefs of Staff Chairman, took the role as Operating Partner with the firm. General Pace was also named as Chairman of the Board to Pelican Products, an advanced lighting systems and valuable equipment case manufacturer. He will also direct ILC Industries, Inc., a company that provides defense electronics (of course the defense angle).

Grant Behrman of the firm noted that General Pace has forty years tenure in the Marines and then as Chairman of the Joint Chiefs of Staff. Pace graduated from the U.S. Naval Academy and has an MBA from George Washington University.

Behrman Capital is a private equity investment firm with more than $2 billion of capital under management and it invests in management buyouts, leveraged "buildups" and recapitalizations of established growth companies. If you look through the private equity firm's portfolio companies, you can see why having a former general and Joint Chiefs of Staff Chairman would be a good thing.

That loud cracking sound you hear is the sound of The Blackstone's Group's (NYSE: BX) Steve Schwarzman's wallet opening to the tune of a $100 million donation to the New York Public Library, according to The New York Times.

That's what it takes, apparently, to rename the main Fifth Avenue landmark building, which will be called the Stephen A. Schwartzman Building when its renovation is completed in 2014. That's pending approval of the landmark commission and the ability to withstand the roar of the chattering classes, which the Times politely referred to as the inevitable "spirited commentary."

Schwarzman has come under scrutiny because though his high-spending habits have been commensurate with the the size of his personal fortune, his charitable giving has not. While he has given more than most people could ever dream of, as chronicled in James Stewart's article in The New Yorker, this major donation to the New York Public Library is his biggest yet.

Stewart notes that Schwarzman's alma mater, Yale, balked at renaming a dining hall after him for an oddly-structured $17 million donation, and the offer was withdrawn. So for any Yalies out there with only $20 million or so to give, that naming opportunity remains -- it will take five times as much to get your name etched at 42nd and Fifth.

Carl Icahn is one of the top billionaire activist investors that traders actively watch (and follow with real money trades). On Thursday, an Icahn Enterprises (NYSE: IEP) subsidiary announced the closing of its sale of four Nevada casinos to a Goldman Sachs (NYSE: GS) managed real estate fund called Whitehall Funds.

Valued at $1.2 billion, the sale includes the Vegas-strip Stratosphere, two off-strip Arizona Charlie's casinos and Aquarius Casino in Laughlin.

Last month the transaction was approved by the Nevada Gaming Commission, so Icahn is definitely getting the funds. Here is a full list of Icahn's most current top holdings, and Mr. Icahn is buried in some of these positions. He may want to average down rather than go after new targets.